1951-06-05

Mr. A. C. Stewart (Yorkton):: On a question of privilege, Mr. Speaker, I wish to point out that in the March 15, 1951, issue of Maclean's magazine, which has only now come to my attention, in an article written by Mr. George Hillyard Robertson, he said the following:
Political arguments are one thing in which Reginans still maintain their old-time spirit. Once, James Gardiner, then leader of the Saskatchewan Liberal opposition, peeled off his coat and charged across the legislative chamber toward Carl Stewart, a Conservative M.L.A. The two were separated before any blows were exchanged but it took the house a day to get back to normal.
The hon. gentleman who is now Minister of Agriculture (Mr. Gardiner) did not at any time peel off his coat, nor charge across the legislative chamber towards me, nor was I-*


Some hon. Members:: Order.


Mr. Gibson:: It is a question of privilege.


Mr. Speaker:: Order.


Alan Carl Stewart: -nor was I a
Conservative M.L.A. in such legislature. I was the leader of an independent group, chosen as such leader by them, and served as minister of highways in a government known as the Co-operative government. Nor were the two of us separated at any time before any blows were exchanged, nor did it take the house a day to get back to normal. Such foolish articles as this one written by Mr. G. H. Robertson are not calculated to improve the knowledge of the Canadian public with regard to political affairs. The incident that did occur thirty years ago, of which this is an exaggerated report, was amicably settled by the participants in my room two days later.
The statement is further incorrect in that I never at any time ran as a Conservative candidate, as the election records in the archives of the governments, both provincial and federal, will show; and I was opposed in three federal elections by Conservative candidates who incidentally all lost their deposits.
I also wish to speak on a matter of privilege concerning an article appearing in the Leader-Post of May 31. Premier T. C. Douglas, the C.C.F. leader in the Saskatchewan government, makes a personal attack on me; he says that I have belonged to almost every political party in existence, and therefore no one was likely to give the statement I made in this house relating to the Saskatchewan civil service much credit.
The statements of Mr. Douglas, both as to patronage as practised by his government and as to myself personally, are absolutely untrue. I have never been a member of any political party except the original Progressive party, and in the last federal election the Liberal party.



LABOUR CONDITIONS


Right Hon. L. S. St. Laurent (Prime Minister):: I should like to lay on the table copies, in English and in French, of an order in council of June 4 amending the regulations respecting great lakes seamen's security. Those regulations are now in force. It has been found that with respect to the men on some small craft, such as small fishing vessels, or barges used as auxiliaries in dredging operations in the lakes, no useful purpose would be served by applying these regulations. The order in council authorizes the Minister of Labour to make orders exempting them from the application of the general regulations.



PRINTING BUREAU


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I should like to ask the Secretary of State if he is now in a position to answer a question I asked on the orders of the day on May 15 with regard to the request of the Ontario federation of printing trades unions that the employees of the federal printing bureau be accorded the right of collective bargaining.


Hon. F. G. Bradley (Secretary of State):: Mr. Speaker, I have made inquiries and find that the Times-Gazette, published in Oshawa, reported that the federation of printing

Inquiries of the Ministry trades unions had passed a resolution demanding that the federal government accord to the civil servants the right to belong to a union of their choice and to bargain collectively.
I have no knowledge of any regulation or order of any kind which prevents any civil servant from joining the union of his choice.
The matter of collective bargaining raises a question of principle. Employees of the public service are recruited by the civil service commission, through competitive examinations advertised across the country, and a choice is made on the basis of merit, irrespective of union affiliations. The same principle of technical qualification is applied in connection with promotions, and there is no discrimination between employees, whether they belong to unions or not.
It is not considered that it would be in the interests of the service to exclude non-union citizens from free access to government employment.



VETERANS AFFAIRS


[Stage Direction]
On the order for motions:
Mr. L. D. Tremblay (Dorchester) moved:: That the name of Mr. George be substituted for that of Mr. McLean (Huron-Perth) on the special committee on veterans affairs.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. A. Earl Catherwood (Haldimand):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture, or, in his absence, to the parliamentary assistant. Is the government giving consideration to a thorough investigation into the alarming spread of Newcastle disease in poultry, which until recently was confined principally to one section of the country but is now being reported in many other parts of Canada?


Mr. Robert McCubbin (Parliamentary Assistant to the Minister of Agriculture):: should like to thank the hon. member for Haldimand for giving notice of his question. I can assure him that this disease, which is spreading among poultry flocks, is well in hand. We hope to bring it under control and, if at all possible, to eradicate it.



DECENNIAL CENSUS


[Stage Direction]
' On the orders of the day:
Mr. J. J. Smith (Moose Mountain):: I should like to ask a question of the parliamentary assistant to the Minister of Trade and Commerce. Because we are members of parliament, some of us will not be home during the month of June. As June is the month in which the census will be taken, can the parliamentary assistant tell us whether the department or the bureau of statistics has any plans under which members will be included in the census?


Mr. G. J. Mcllrailh (Parliamentary Assistant to the Minister of Trade and Commerce):: Members of parliament who are now in Ottawa will be enumerated where living in Ottawa. The enumeration is made on transient card form 2-A. That card is referred back to the electoral district of the member, and is included in the return for that electoral district.


Mr. Fulford:: Does one have to answer the questions in Ottawa if one has already answered them?


George James McIlraith: If there is a duplication of enumeration cards, such duplication is picked up and the duplicate card eliminated before the . returns are tabulated in the local constituency.



OTTAWA ORDNANCE DEPOT


[Stage Direction]
On the orders of the day:
Mr. H. O. While (Middlesex East):: Mr. Speaker, I should like to ask a question of the parliamentary assistant to the Minister of National Defence. My question arises out of the recent disastrous fire in Ottawa. What increased security precautions are being taken in respect to the military establishment at London, Ontario? Are negotiations proceeding for the purchase of the property known as the Ontario hospital, situated at Dundas street and Higbury avenue at London, Ontario, for military purposes?


Mr. R. O. Campney (Parliamentary Assislanl lo Ihe Minisler of National Defence):: Mr. Speaker, I should like to take the hon. member's questions as notice.



CUSTOMS TARIFF

Hon. Douglas Abbott (Minister of Finance) moved: the third reading of Bill No. 295, to amend the Customs Tariff.


Mr. Jean Francois Poulioi (Temiscouala):: Mr. Speaker, I listened to the debate on this
bill, and to that on another bill amending the Excise Tax Act. There will be a third bill concerning the income tax.
I noticed that during the debate some members said that there are some good features in the bill. This puzzled me, because taxation is always unpleasant. I cannot see why or how anyone could rejoice about new taxes. On the other hand, I admire once again the wisdom of the government. I did not favour the $65 million gift to the western farmers, but as I listened to numerous requests for a gift amounting to nearly five times more, I wondered what other good features those hon. members who are satisfied with taxation would have suggested to the government in order to pay for that surplus gift.
They like taxation; they want more gifts. How would they pay for them? This has puzzled me greatly. I now speak as the man in' the street who has read in the press numerous requests for more gifts, and who is puzzled to see that those who make the requests complain about taxation. Besides that, those who continuously ask for more money for defence cannot complain about taxation, especially taxation of this kind. They agree that they want more expenditures, yet they combat taxation and offer no substitute or alternative. If the government had considered favourably the numerous requests for more gifts to the western farmers, and more expenditures for national defence, I wonder what the suggestion of those hon. members would have been, in the way of new taxation.
It is easy to complain about taxation. But one of the foremost principles of democracy is the rule of the majority. Minorities may express their dissent or disagreement, but after a decision is reached by the majority we must stand by that decision, especially if the majority is composed of gentlemen who agree as to the necessity for an expenditure.
To summarize what I have said, I do not consider that there are any good features in the three bills, the one before the house at this time and the two others, but I consider that they are necessary. As the expenditures have been agreed to, the taxpayer must foot the bill. I realize that if any other party or group had been in power, things would have been much worse than they are now.


Mr. M. J. Coldwell (Rosetown-Biggar):: Mr. Speaker, since the hon. gentleman has been allowed to state that the western farmers have been receiving gifts, may I say that the $65 million which was appropriated was
Customs Tariff
merely compensation for the prices that were accepted during the war years. During the years 1945, 1946 and 1947 the western farmers also subsidized the bread and flour which was used by the domestic consumers of Canada, to the extent of 160 million bushels at thirty cents a bushel; hence the request that is made now for additional compensation to the extent of $48 million for those 160 million bushels. I just want to draw that to your attention.


Some hon. Members:: Order.


Major James William Coldwell: The hon. member for Temis-couata was allowed to make a statement, and I notice that neither the Minister of Finance nor other members of the government interrupted him, called him to order or contradicted him.


Douglas Charles Abbott: I only interrupted the hon. member when he referred to the $48 million on top of the $65 million, which certainly has nothing at all to do with this bill.


Major James William Coldwell: Why did not the minister interrupt the hon. member for Temiscouata when he was making his statement? I am just trying to put the matter in the proper light before the house.


Jean-François Pouliot: I rise on a question of privilege. In my humble opinion the hon. gentleman cannot deny to any one of his colleagues the right to speak on the third reading of any bill when he has not spoken before. We live in a free country. The Minister of Finance has shown his appreciation of human rights and fundamental freedoms. I remember years ago that when I sponsored a bill to abolish Bennett's economic council, the predecessors of the hon. gentleman-


Some hon. Members:: Order.


Jean-François Pouliot: -interrupted me in the same fashion to denounce the rights of private members of the house.


Some hon. Members:: Order.


Jean-François Pouliot: Has the hon. member-


Some hon. Members:: Order.


Mr. Speaker:: I understood that the hon. member for Temiscouata was rising on a question of privilege. I suggest to him that he state his question of privilege as briefly as possible.


Jean-François Pouliot: Yes, sir. My question of privilege is that no hon. member or no leader of any group can deny to any hon. member the right to express his feelings with sincerity and conviction. To satisfy the hon. gentleman-


Some hon. Members:: Order.
3720

Customs Tariff


Jean-François Pouliot: *-I will substitute the word "compensation" for the word "gift". What I said about the gifts applies to compensation.


Mr. J. H. Blackmore (Lethbridge):: Mr. Speaker, I had not intended to say anything more on this bill, but the hon. member for Temiscouata (Mr. Pouliot) does have a way of provoking remarks. I should like to draw to his attention the fact that the Social Credit group have offered an alternative for raising revenue, and I defy him to prove that there is no other way to get money than by taxing or borrowing. I want to make that clear to the hon. member.
I have just one thing more to say. There was no "gift" of $65 million to western wheat growers; the $65 million was merely a payment on account.


Jean-François Pouliot: I thank the hon. gentleman for his kind support.
Motion agreed to and bill read the third time and passed.



EXCISE TAX ACT

[Stage Direction]
The house resumed, from Monday, June 4, consideration in committee of Bill No. 294, to amend the Excise Tax Act-Mr. Abbott-Mr. Dion in the chair.
On section 2-Duty paid value.
Mr. Macdonnell (Greenwood):: When the
committee rose last night we were considering section 2. As I understand it, the parliamentary assistant had asked us to accept this section, partly on the ground that it agreed with the wording of section 5, which I understood him to say was of long standing and contained a wording which had been worked on and therefore we should accept it. I note that the explanatory note opposite section 5 reads:
The purpose of this amendment is to provide clearer definitions of "duty paid value" and "sale price," for purposes of part XIII of the act under which the consumption or sales tax is imposed.
Therefore I do not think the parliamentary assistant can ask us to accept the wording of section 2 as being sacrosanct merely because it is the same as section 5. That reminds me of a situation which existed years ago in Kingston. A gun was fired at twelve o'clock every day at the fort. Someone was out at the fort and asked how they got the time for the gun, and was told that they got it electrically from a jeweler in Kingston. Next day he happened to be in the jewelry store at twelve o'clock and heard the gun fired. At that moment the jeweler said, "We must set our clock; there goes the gun."
I suggest that the parliamentary assistant
IMr. Pouliot.]
is not helping us by this reference to section 5, and perhaps he might explain it further.
While I am on my feet I should like to refer to an answer which was made to a question asked by the 'hon. member for Hamilton West, and I quote from page 3715 of Hansard where the hon. member is quoted as follows:
Then if a manufacturer allows a discount for cash do you permit him to apply the sales tax to the net amount after the discount has been deducted?


Mr. Sinclair:: That is quite right.
Is the parliamentary assistant sure of that?


James Sinclair: When this question was raised last night I was perhaps not as well briefed as I should, be, mainly because we were then dealing with the existing act whereas I had got prepared on the details of the amending bill. It is generally in connection with the changes that the department and I do our homework. First of all let me say that the details of section 79 (b) (ii) ar.e not the result of circumstances similar to those affecting the jeweler in Kingston. The question goes back to the time of Right Hon. R. B. Bennett, who was minister of finance as well as prime minister in 1934. In order to avoid the full effect of the sales tax, certain manufacturers, notably automobile manufacturers, sought to break up what was regarded as their sale price into items such as manufacture, advertising, servicing. The dealer or the retailer paid the full price, but then it was claimed by the manufacturers that the sales tax applied only to the cost of the manufacture of the car. It was because of that that this section was first spelled out so far as sales tax is concerned. Then I have found that in the schedule of the present act it is spelled out with respect to automobiles so far as the excise tax is concerned.
Let me go through each of these items and give examples. First of all there is advertising. Every national manufacturer advertises his product nationally, whether it be a car, a radio or a television set. Undoubtedly that is reflected in the actual sale price to the wholesaler or jobber of that item. I am informed that some manufacturers, such as radio manufacturers, actually specify it as being two and one-half per cent of the selling price of their goods to the wholesaler or jobber to whom they sell.
The next one is financing. This brings in the matter of cash discounts, referred to by the hon. member for Hamilton West. If the manufacturer in selling his product to the jobber or wholesaler has to finance that sale, that again is a cost to him of selling the article, a cost which is properly included in his selling price. If the buyer, however,

finances it through a finance company, that is different; it is not a cost to the manufacturer. If the manufacturer, as suggested last night by the hon. member for Hamilton West, has to turn to a finance company to finance it, then that is an operation of the manufacturer which is reflected in the selling price. So far as cash discount is concerned, I must confess that after giving that answer last night I thought it over and wondered how allowance would be made for a cash discount, since most manufacturers of course sell with the thought that purchases will be paid for in thirty, sixty or ninety days.
The customs and excise branch of the Department of National Revenue does not demand payment for sales and excise taxes collected in this month until the end of the next month. Therefore purchases made at the first of the month have sixty days to run, and those at the end of the month have thirty days to run, the average being forty-five days. Most cash sales are for ten days. You pay in ten days, or at the outside thirty days, and you get the benefit of the cash discount. Therefore the manufacturer still has in his possession the invoice of sale, and if there has been a cash discount he takes that off his selling price and the sales tax is levied on the remainder. That is an accepted practice of the trade.
The next matter is servicing.


Mr. Thatcher:: Before the parliamentary
assistant leaves that point, I do not wish to contradict him, but 1 can tell him that the practice of the trade is not as he says. Manufacturers always charge sales tax on the invoice price. Then if you take your cash discount afterward you save that amount; but certainly at no time do you get a rebate on the sales or excise tax that has been paid.


James Sinclair: I am again informed-and I
went over this point very carefully with the officials of the department-that credit is given in the cash discount for the amount of sales tax which might have been paid on the total price, including servicing.


Wilbert Ross Thatcher: It is given to the manufacturer or to the person who buys the article?


James Sinclair: The point made is again the
point I made before, that the manufacturer does not remit his sales tax until thirty to sixty days, an average of forty-five days, afterwards. If the sale to the customer has been on the basis of a cash discount, then that is the actual invoice of the selling price by him to his customer. The fact that there 80709-237J
Excise Tax Act
was a discount is shown, and he pays eight per cent-now ten per cent-sales tax on that item.


Wilbert Ross Thatcher: I am sorry, but I must
tell the parliamentary assistant again that is not the general practice.


James Sinclair: The hon. member of course
is at the receiving end of having a price and getting a cash discount. I am now talking about the practice of the Department of National Revenue in accepting these invoices from the manufacturer. If the individual can get a discount, the manufacturer shows it on the invoice and pays his sales tax on the net selling price to the jobber or wholesaler, or, if he should sell directly, to the retailer.
The next point was servicing, and the difference between servicing and a warranty. Taking again the example of an automobile, because it is the easiest one to use, the warranty is that for the first six months or first year they will not only service the article but will replace defective parts, and, if need be, replace the whole article if it should prove to be defective. That is a warranty. Aside from that there are, as all hon. members know, servicing guarantees given on cars and other such items. An automobile manufacturer will service your car for the first
10.000	miles. It may take some people a year, some two years, and some even three years to use up the 10,000 mile service guarantee given by the automobile manufacturer, which servicing is still one of the costs included in the selling price of the manufacturer to the dealer.


Mr. Fraser:: I do not think there are any
manufacturers who give 10,000 mile service. I think it is 4,000 miles or ninety days, whichever comes first.


James Sinclair: The actual details are a
matter of indifference. I know that on my car I have a 10,000 mile service guarantee. In a year I have only travelled 6,000 miles, and I still have coupons and cards from the car company from which I bought it not the dealer-assuring me of this service up to
10.000	miles. But whether it is 10,000 or 1,000, ten days or five years, it is still servicing.
The last matter is commission. Some manufacturers sell their goods through their own salesmen who are on salary, some throug salesmen on commission, and some through salesmen on a joint salary and commission basis. It has been argued that where manufacturers pay outright commission it is not a cost of manufacture. There is no doubt that it is a cost to the man who buys the car,

Excise Tax Act
because the manufacturer's cost and the commission have been added before the person purchases the car. Again so far as the interpretation of sales price in the present act is concerned, and in the schedule so far as excise tax on cars is concerned, that has been interpreted as a part of the selling price.
I think I have answered the points the hon. member raised. '


James MacKerras Macdonnell: There are one or two points about which I am not clear. We are talking about a tax at the manufacturer's level.


James Sinclair: That is right.


James MacKerras Macdonnell: How could commission, which presumably is paid to an intermediary, come into the manufacturer's cost?


Mr. Sindair:: Because the manufacturer himself has salesmen. The manufacturer does not merely sell by catalogue. It may not be so in the automobile industry, but in other industries many manufacturers have their own salesmen who go to jobbers, wholesalers, department stores and chain stores to push their products. In the actual net cost to the purchaser of those goods there is induded the cost of manufacture and these other things, plus the commission paid the salesmen of the manufacturer who in the end might sell to a jobber, wholesaler, or department store, or, in the case of direct sale, to a retailer.


James MacKerras Macdonnell: How do you
assess the value of the warranty for taxation purposes?
Smclair: We do not have to assess that. When I bought my car, from a company which I shall not mention, as I recall it I paid $2,038.


Mr. Fleming:: That must have been before there was any increase in tax.


James Sinclair: It was over a year ago, so it was long before there was any increase in tax. It is a very modest car, and has only gone 6,000 miles.


Mr. Graydon:: Did you get it from war assets?


James Sinclair: In that cost-and I bought through a local dealer-was included the cost of the manufacture of the car; the cost of the advertising which the company did in a national magazine and which drew their car to my attention; the cost of the warranty that if the car was defective in the first year or three months or six months-whatever it is-they would replace' the parts; and the (Mr. Sinclair.]
cost of servicing for the first 10,000 miles. I don't know what the division of costs was. All I paid was that final price, but in the price the dealer paid the manufacturer the same things were included.


James MacKerras Macdonnell: When you say that, do you mean that they were specifically included or that they are deemed to be included?


James Sinclair: When they were trying to get around this they were specifically mentioned. Because of this interpretation they are no longer specifically mentioned. That is the price of the car and all these other things connected with the car which the manufacturer sells to the dealer and the dealer sells to the consumer.


Stanley Howard Knowles: Would it not be fair for the parliamentary assistant to tell us what kind of car has a servicing contract for ten thousand miles?


James Sinclair: It is certainly not the job of the parliamentary assistant to mention any trade names, but the car is parked right out in front of this building on the right hand side, with plenty of dust on it.


Mr. Knight:: I should like to get some clarification of a ruling concerning the importation of certain diamonds, in connection with which I have had several communications. This is a case in which diamonds were sent out of the country for reconditioning, I think to Antwerp. When such diamonds are sent there they are checked by the customs at that port and certified as to identification. Then the necessary repairs are, made, which I presume is simply a matter of cutting down the diamond. You cannot make a diamond larger; it has to be made smaller. This work is done and the diamond is returned through the customs at Antwerp, where it is again checked for identity. But when it comes to the Canadian side an excise tax is charged just as though it were a new stone. The original stone paid an excise tax when it was admitted to the country in the first place, and these people are greatly concerned. They say they cannot have that work done with advantage to themselves in this country, and it is therefore necessary to return such stones to the point of origin in a foreign country. When it comes back, however, they find the same tax collected as though it were a new stone, and they say they cannot charge their customers enough to carry on this sort of work economically. .
After these people wrote to the department they were informed that the ruling that the second charge was correct was based upon the fact that these stones are not easily identifiable. In the letter to which I am

referring at the moment the writer says "identical" but I think he must mean identifiable. I would like some comment on that. Does not the parliamentary assistant think that tax is unjust under those circumstances? It is an easy way out to say, "Well, how can we tell it is the same stone? Let us collect the second tax," but I think this should be looked into, and if the regulation is not justified by the facts it should be changed.
One of the letters I have had from the retail merchants' association, backing up this claim, asks that the case be reconsidered. They suggest that the ruling in this instance be clarified, since this firm definitely cannot continue to pay the customs duty on diamonds which are forwarded for reconditioning. As I say, there is no place in this country where the work can be done. This looks to me like an unjust tax, like an easy way out. If there is a process of identification, as I submit there is, then the diamonds should be identified and the tax paid only once. If the stone has been improved1 in value I suppose there could be a tax on the improvement, but I do not think it has. It has been made smaller, and has decreased in value.


James Sinclair: This, of course, would be primarily matter of customs administration that would come under the Customs Act which was under consideration last week. So far as I know, the only reconditioning that could be done to diamonds, to use that word loosely, would be regrinding to make a diamond smaller and with different facets. No one would have that done unless it was going to improve the value of the diamond. One would not deliberately take a diamond and have it cut down to reduce its value.
The other point is that if a manufacturing process is involved in connection with any article, whether that article be raw or semifinished, and the article is brought back into the country, naturally its value has been increased, so there are sales and excise taxes, in the case of luxury goods, on the processing which has changed that article from a semi-finished nature to a finished nature.
However, getting back to my first point, this is primarily a matter for the administration of the Department of National Revenue, so it does not quite come within the Excise Tax Act. I am quite sure, however, that the Minister of National Revenue will take note of the hon member's plea in this regard and give him an answer.


Robert Ross (Roy) Knight: If there were an increase in
value, as the parliamentary assistant suggested, I could see the justice of charging a tax on that increased value, but not on the total value of the stone. I do not think his
Excise Tax Act
argument is well founded when he says the value has been increased, because I am comparing two values. I am comparing the value of the stone upon which the excise tax was originally paid with the value of the stone on the second occasion. A stone would be sent out to be reconditioned because it had deteriorated or been damaged so it was not worth the original cost. The comparison I am making is between the value of the diamond in the first instance, which was certainly higher, and the value in the second case; but it was upon that original value that these people had to pay their excise tax. Now, after the diamond has deteriorated and they have gone to the expense of having it made of some value, you are taxing them on the full value of the stone, which you have done already on the greater value in the first place. I do not think the first argument advanced by the parliamentary assistant holds water. I cannot see it. He gives the assurance that the Minister of National Revenue will look into the matter. Of course we have had that assurance at least once before. The matter was looked into, and I was taking this opportunity to suggest that the decision in that case was wrong. However, again I ask that the matter be looked into.


John Lambert Gibson: Can the parliamentary
assistant tell me the mechanics of the change in the application of the sales tax to logging truck tires? There has been a change recently, and I would like the parliamentary assistant to explain it to me.


James Sinclair: I am informed that this
problem has two sides. First there is the increase from eight per cent to ten per cent in general sales tax. Then there is the question whether or not a contract trucker, a man who contracts with a logging company to move their logs from stump to dump, is entitled to the exemption provided for the primary logger who cuts his own logs and moves them down to the sea, at least in British Columbia.


John Lambert Gibson: Then do I understand that
the tires used by the primary logger are exempt from sales tax?


James Sinclair: Once again this is a technical question which has been under review by the department for some time. I am not competent to give an answer at the moment, but the hon. member will certainly have an answer promptly from the Department of National Revenue, which administers the act.


John Lambert Gibson: That is what I am rather
curious about. Logging truck tires have been exempt from sales tax over the years. I am just wondering by whose authority-it

Excise Tax Act
certainly was not done by parliament-this exemption has been taken away. I hear they have a new gimmick in this thing now. They have arranged it so that they say that tires that are designed, manufactured for and used exclusively on logging trucks are exempt from sales tax. Now, there is no possibility of acquiring that kind of tire. It is just like having a slot machine. If you get three cherries, you get some money out of it. In this case the national revenue department has removed two of the cherries. You could not buy a tire of that kind any place in the world. A tire is a tire. There are certainly no tires that are designed for, manufactured for and used exclusively on logging trucks. Where did the authority come from to change that original regulation and make it so that the sales tax is applicable to these tires?


James Sinclair: This is quite a technical matter on which the member for Comox-Alberni is apparently much better informed than I am or the officials with me at the moment. I recall two or three weeks ago the member was advocating the broadening of the sales tax to make it applicable to farming and the mining and logging industries. It is for that reason the question is bewildering. He rather advocated that the sales tax be put on these tires, andi when this sales tax has been applied again-


John Lambert Gibson: On a question of privilege, Mr. Chairman, I asked the parliamentary assistant originally if consideration had been given to broadening the base of the sales tax. I think it was a fair question. I eventually got an answer from the minister concerning the particular case about which I was asking. I was referring to the use of radios on logging trucks. The department had ruled, as I presume they have authority to rule, that a radio was not necessary on a logging truck, and was therefore subject to sales tax. However, I must be very careful, I can see that, about suggesting a source of revenue for the department, because it will be held against me for years.


[Stage Direction]
Section agreed to.
'On section 3-Furs.
Major James William Coldwell: This section has to do with 'furs. First of all, I support the idea that luxury furs should bear a tax under present circumstances. What I have in mind is that the cheaper furs should not be subject to the tax. Coming as many of us do from the prairie provinces, we know that in the wintertime furs are very necessary if one is going to drive across the prairies. There are types of furs which are used extensively, not because

they are luxuries but because they are necessities. I have in mind a fur that is known as mouton or beaver lamb, for example. I do not know whether it is included in this group, because, after all, mouton or beaver lamb is really a sheepskin died to look like beaver. It is perhaps one of the cheapest and warmest furs that can be worn.
I suggest to the minister that if it is intended that this tax should apply to furs of that kind, which are necessities rather than luxuries, an exemption could be made. Are these so-called beaver lambskins classified as furs, and if so, are they subject to this twenty-five per cent tax? I have in mind other cheap furs, such as the wolfskin which is sometimes used for parkas and so forth. I believe they should be relieved of this tax. I have no objection to taxing luxury furs.


James Sinclair: This is an item, of course, which is discussed in a similar fashion every year. It is quite true that it would be desirable if we could segregate the furs generally used on the lower levels from the expensive furs. During the first war they tried to segregate clothing in that way, but the tax schedules did not work out very well. We levy these excise taxes on all furs, other than the straight sheepskin shearlings, not the ones which are dyed to resemble beaver or the ones to which other trade names are applied but the sheepskin shearlings which are used for the linings of coats worn by workmen, drivers, and so forth. They are not taxed. If the sheepskin is processed to look like a more expensive fur, it actually becomes a more expensive fur and then it becomes subject to this tax.


Major James William Coldwell: Then the ordinary sheepskin, undyed, would not be subject to that tax? It is not classified as a fur?


James Sinclair: That is right.


Major James William Coldwell: How is it possible to classify a sheepskin, once it has been dyed, as a fur?


James Sinclair: Because it has been processed. The reason for processing it and giving it this fancy name is to lift it to a better price in the market than that which would be given for a straight sheepskin. Where sheepskin is worn for its warmth, as by farmers out of doors and drivers of cars-that is, a coat with a sheepskin turned inside-it is not subject to this tax.


Mr. Wright:: What is the extent of the processing that has to take place before a sheepskin becomes a fur? There is a certain amount of processing of any sheepskin.


James Sinclair: I am informed that the department says that a sheepskin which has

been combed, electrified and then dyed is regarded as a processed sheepskin.


Mr. Argue:: I agree with the point made by the leader of this group that cheaper furs are certainly not a luxury. The parliamentary assistant has said that unprocessed sheepskins are not subject to this tax. If I am on a farm in the wintertime, and I buy a sheepskin coat with a canvas outer covering, there is no tax. But if I do not have a combination cloth and fur coat, which that actually is, but buy a processed sheepskin such as mouton-which is still a cheap coat-that coat is subject to the tax. As I understand it, the parliamentary assistant says it is only a utilitarian garment. Surely it is a utilitarian garment if a working girl in the city or a schoolteacher in the country who is walking to school has a cheaper fur coat.


Douglas Charles Abbott: The member for Winnipeg North Centre.


Hazen Robert Argue: I doubt that the member for Winnipeg North Centre has a fur coat; it is probably a camel pile.


Stanley Howard Knowles: And I have had it for sixteen years.


Douglas Charles Abbott: It looks like it.


Hazen Robert Argue: I do not think the amount of money involved in exempting the cheaper line of fur coats would be very great. I noticed that while the tax on furs brought in some $3 million for the fiscal year 1950, the total revenue from excise tax amounted to $571 million. I wonder if the parliamentary assistant could give some reason why a segregation cannot be made allowing the mouton coats, processed lamb, rabbit fur, South American rodent and the opossum- those are the furs that come to mind at the moment-to be exempt from the tax. A lady can buy one of those coats for around $100. She can, of course, buy a cloth coat for that amount too, but why should she be forced to wear a cloth coat of similar value because there is an increase of twenty-five per cent in the excise tax? Is there not some way in which the cheaper fur could be exempt from this tax?


James Sinclair: There is nothing more I can add to what I have just said. The hon. member mentioned the schoolteacher and the farmer's wife. If you go to the next level, the school principal or the wife of the chairman of the school board, where are you going to draw the line between the type of processed sheepskin, and the cheap fur and the
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more expensive furs? We have drawn the line at the lowest level of sheepskin, which is not called mouton or Belgian rabbit.


Hazen Robert Argue: That is not a fur coat at all. That is a cloth coat with a skin lining.


James Sinclair: The hon. member is much more of an expert in these things than I am. We are not changing the classification; all we are doing is changing the rate from 15 per cent to 25 per cent.


Major James William Coldwell: I would not object if the sheepskin were classified properly as sheepskin treated, not as fur. Probably that is the most satisfactory and the cheapest form of coat that can be bought, to resist the severe weather on the prairies. They are used by farm wives and by teachers and others who have long drives to make. The hon. gentleman mentioned a moment ago a fur coat of another kind. I have had a beaver lamb coat that I have worn for a good many years driving on the prairies. You simply cannot compare it with a cloth coat for warmth. Farmers and others who have to drive in the cold weather do not want to wear the short canvas coat with the sheepskin lining. Surely they are entitled to have a sheepskin coat, whether it is dyed or undyed. Women of course do not wear canvas covered sheepskin coats.


Gordon Graydon: The hon. member is not an expert on what they wear.


Major James William Coldwell: As the hon. member for Peel says, I may not be an expert, but I have a wife and daughter and I know something about clothes.


Donald Methuen Fleming: About footing the bill,
anyway.


Major James William Coldwell: Yes. If these sheepskins were classified, processed or unprocessed, dyed or undyed, as sheepskin, I do not think there would be as much objection to this particular tax as we have now.


Mr. Murray (Cariboo):: In the Peace river country, where it is very cold, the school teachers wear muskrat coats and nylon stockings when it is 55 degrees below zero. Very rarely do you see a school teacher wear a coat that costs less than $400 or $500.


Major James William Coldwell: That may be true in British Columbia, but in many parts of Canada there were times when the teacher did not get $400 or $500 for a year's work.


George Matheson Murray: The hon. member should return and become familiar with his people out there.


[Stage Direction]
Section agreed to.
Sections 4 and 5 agreed to.
[Stage Direction]
Excise Tax Act
On section 6-Consumption or sales tax of ten per cent.
Donald Methuen Fleming: This clause, while it is brief, certainly outdoes any other provision in this bill in sheer iniquity at a time like this. This subject of the increase in the sales tax has been discussed on several occasions and I do not pretend that at this stage anything new is likely to be offered in opposition to it; nevertheless, Mr. Chairman, I do not feel disposed to let this occasion pass without again offering the strongest possible objection to this increase in the sales tax.
The minister has not made out a case for a sufficient increase in general taxation to cover the amount of money that he estimates he will derive from this increase in the sales tax; nor has he, apart from that first point, made any case for raising money by this iniquitous method.
Now, sir, we have already had no little discussion about the minister's budgeting in general; but surely, Mr. Chairman, what the minister had to say in pleading for increases in taxes to meet estimated increases in expenditure, and to balance his budget, and provide a surplus of $30 million, has been swept aside by the revenue and expenditure figures that have been disclosed for the first month of this present fiscal year. When we see, as we have seen, that the minister has a surplus for the month of April of $121,500,000, which is something vastly greater than the surplus for the month of April, 1950, the minister has no shred of excuse for seeking this increase in the sales tax.
The minister cannot deny that this is the most inflationary of all his budget proposals.


Douglas Charles Abbott: He certainly does deny it.


Donald Methuen Fleming: Then I wish the minister would give some reasons for his assertion, because there is nothing but his plain ungarnished assertion to back up the point that he is seeking to make.
This increase in the sales tax is going to go on snowballing as the things to which it applies pass from hand to hand, from the manufacturer or producer to the wholesaler, to the jobber, to the retailer, to the consumer; and it is not going to produce an amount of revenue commensurate with what it is going to cost the consumer. Figures have already been put on Hansard-I think I know them off by heart now-which establish conclusively that even in the simplest cases this tax costs the consumer just about twice what it yields to the government in revenue. You can find other cases in which the goods are passing through more than the hands of the producer, the wholesaler, the

retailer and consumer, and also with respect to particular classes of goods, the amount that the tax in that snowballing or pyramiding process costs the consumer in mark-ups is far in excess of the amount that the government receives by way of revenue. In some of these cases it is more than double the amount of the tax. The government does not receive any more tax, but the consumer is going to be paying in these cases just about double what the government is going to collect out of it in taxes. The remainder goes to inflate the cost of living, and it will take more than assertion and mere denial, as the case may be, on the part of the minister to escape that fact.
Here we are with a cost of living reaching 182 points at the end of April, the highest in our history, and the minister persists in demanding from the house a twenty-five per cent increase in the sales tax. It will not be forgotten, I hope, that in addition to this increase in sales tax a whacking increase in the excise tax on many goods is being imposed as well. These taxes are cumulative. In fact, when you add the tax increase in section 6 of this bill to the tax increases imposed in some of the later sections, you have amazing increases which inevitably will have the effect of increasing very substantially the cost of many of the necessities of life.
Let no one go away with the impression that these taxes have not already had the effect of increasing the cost of many of the commodities to which they apply, and commodities which cannot be said, in a country like ours, measuring the standards of life by established and accepted Canadian standards, to be luxuries. I have before me some figures which I think may be of interest. Electric washers which cost $209 before the minister's budget now sell at $249. An electric iron which cost $14.50 before the budget now sells at $16.50. An electric toaster which cost $9.95 before the budget now costs $11.95. Is that a contribution on the part of the minister to beating down inflation in this country, to making it easier for people to meet the soaring cost of living? You see, the minister can only urge or contend that his increases in these taxes on these commodities, or on the other broad range of commodities to which the sales tax applies, make any contribution toward meeting the problem of inflation, if he goes so far as to say, "I do not want people to buy any of these things. I am going to make it so hard for them to buy these things that they will save their money." And he must go beyond that, and say that it is undesirable that people should have these things.

If the minister says that-and I would like to hear him say it openly and boldly, and not resort to mere general statements which have no evidence to support them- then I think the Canadian public will wish to examine the standard of life the Minister of Finance is proposing to prescribe for them. Have we reached the point where electric toasters are so beyond that scale of living which is regarded as justifiable in Canada that the minister is justified in making this whacking increase in the excise tax, and then this 25 per cent increase in the sales tax as well?
Already the increase in the sales tax has made itself felt. It has already contributed to the increase in the cost of living of the Canadian family. It has already increased to a marked degree the prices of many commodities that are, by all accepted standards, necessities of life. And I am told by people who are in business that this increase in the sales tax has also had a very disturbing effect on methods of doing business, and on the classification of goods in regard to various types of quality and price range. Because this 8 per cent sales tax has been in effect for a long time, it has become a normal even though a very heavy part of the normal cost process, in the production, marketing and sale of goods and commodities.
But the effect of this increase of 25 per cent, from 8 per cent to 10 per cent, added to the mark-ups, and the mark-ups on the mark-ups, and the mark-ups on the mark-ups on the mark-ups, has the effect in a great many cases of pushing goods of a well established classification as to quality and price into an entirely different price range, with the inevitable result that the advance in price to the consumer is going to outrun even the yield in revenue to the government, and the mark-ups in the various hands before they reach the hands of the retailer. That disturbing effect has already made itself felt in marketing with regard to a great many of the basic necessities of life to which this sales tax applies.
You will remember, Mr. Chairman, how in 1935 the late Mr. Mackenzie King, in the election campaign of that year, made the welkin ring with his denunciations of the sales tax, when from coast to coast he denounced it as "that iniquitous tax". You will remember his words, I am sure. It was only 6 per cent then. But in due course he increased it to 8 per cent-and that took place in the first session of parliament after that vitriolic denunciation.
But what is to be said today when, faced with a critical situation in Canada created by inflation, we see the Minister of Finance
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proposing another increase in the tax which, at its 6 per cent level, was regarded by the then leader of the Liberal party as an iniquitous tax. I say to you, Mr. Chairman, that there is iniquity written all over this provision in the bill for the increase in the sales tax.
1 will go further and say that, in the face of the way in which business conditions and the cost of living have responded to this increased sales tax, and having regard to the way the cost of living has increased in the interval, and having regard to the sense of public outrage which has attended this proposal and, above all, having regard to the fact that the figures for one month-the month of April-concerning the revenue and expenditure of this country, these have knocked the props completely from under the estimate put before the house by the Minister of Finance as to estimated expenditures and receipts for the whole year. I say that there is no justification remaining now for the Minister of Finance to press this increase in the sales tax upon the people of Canada. And I say that if the government were not so arrogant, if the government were not so everlastingly touchy about any measure of losing face we would see the Minister of of Finance, if he had some realistic appreciation of the burdens of the people of Canada arising from inflation and the soaring cost of living, coming before the House of Commons-and I think the house would applaud him for what would be considered a commendable act upon his part-he would confess, "I think I made some errors. I think I underestimated the extent to which inflation in this country is increasing tax revenue; I think I underestimated the revenues which are going to be yielded by the existing tax. I know that this particular tax, above all others, is inflationary, and that it will abet inflationary forces, and that it will give them increased momentum; and therefore I ask leave of the house to withdraw this section of the bill."


Gordon Graydon: Repentance from the
minister.


Donald Methuen Fleming: I am convinced that it is nothing but that everlasting unwillingness on the part of the government to do anything which looks like a loss of political face which restrains the Minister of Finance today from rising in his place and withdrawing this iniquitous increase in the sales tax.


Mr. Shaw:: If it is the desire of the Minister of Finance to withdraw this section of the bill I shall gladly refrain from speaking. Obviously however he has no such intention.

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From budget day, April 10, to the present time, my colleagues and I have taken advantage of every opportunity to assail this proposed 25 per cent increase in the sales tax. Sometimes I think that had the government deliberately sought some method by which they could aggravate, annoy and anger the Canadian people, they could not have found a better method by which to accomplish that purpose.
During the debate on the budget members of the opposition advanced numerous arguments which, in my opinion, should convince anyone that the government should withdraw this recommendation. Is it not highly significant that no arguments have been advanced in defence of the proposition? In fact, in my opinion it is highly significant that such arguments have been made conspicuous by their absence.
Moreover I might assert that in the course of personal conversations with members from all sides of the house I have noted a good deal of agreement with respect to the principal characteristics of the tax. I indicated during an earlier speech that some rather strong words had been used when referring to the proposed increase. I said that the words vicious, iniquitous, infamous, insidious and pernicious had been used. As a consequence of developments since the budget date, as a consequence of the increased cost of living since our previous debate, I think those words apply with greater significance today than they did when uttered by hon. members. We have had no cause to change our position since we expressed that opinion on the excise tax resolution. We cannot for one moment feel that there is any justification for the government insisting upon applying this increase in tax. Certainly the revenue position as indicated by the hon. member for Eglinton and others would suggest that there is no good reason for the imposition of the tax.
We cannot for one moment believe that the government is justified in the light of the fact that the low income groups in the country are finding it increasingly more difficult to purchase the necessities of life. We see no justification for the government pursuing their policy of increasing the sales tax by 25 per cent. We are convinced that there are alternatives. The hon. member for Peace River has asserted that the corporation tax field offers a source of revenue which the government would be justified in using rather than to impose this 25 per cent increase in the sales tax.
After I spoke on May 1, issue was taken with my reference to the fact that the sales
tax was in effect a poor man's income tax. The Regina Leader-Post referred to this matter editorially. The essence of their editorial seemed to be that a person who was receiving today an income up to the allowance exemption under the Income Tax Act certainly could not be considered as being a poor man. I sometimes think that it would be a good thing if certain persons who have incomes considerably in excess of the $2,000, which is the allowance for a married man without children, would try to get along for a while on an income near to or lower than the allowable exemptions under the Income Tax Act. It would be a very good experience for some people if they would get out and live with those people who are trying to get by on such incomes.
It is true that today $2,000 sounds like a good deal of money, or even the $2,400 which is the exemption for a married man with three children if he is in receipt of family allowances. I should like to point out something I have mentioned before, but I am bringing my figures up to date. I should like to give the committee the purchasing power today as compared with 1935-39, which is taken as 100, based on the present cost of living index. These comparisons are as follows:
	Present
Present	purchasing
income	power
$2,400 			 $1,318.68
2,000 			 1,098.90
1,500 			 824.17
1,200 			 661.38
1,000 			 549.45
No one, whether he happens to be an editor of the Regina Leader-Post or of any other newspaper, can conceivably argue that a person with a purchasing power within those brackets is not a poor man. Surely it cannot be argued with any effectiveness that such a person is not a poor man when it comes to meeting the present-day cost of living.
Let us consider the position of our pensioners, because it must be remembered that they cannot escape the effect of this sales tax increase since it applies to what clothing they must buy as well as to certain other commodities they need. Pensioners in Alberta receive a maximum pension of $50 per month. Two married people who are able to qualify for the maximum pension would receive a total of $1,200 per year. Taking the present cost of living index, that gives them an effective purchasing power of $661.38. But if they are receiving only the basic maximum pension of $40 per month, without the $10 per month bonus such as is paid in Alberta, those two persons would receive $960. Taking the present cost of
fMr. Shaw 1

living, that would represent an effective purchasing power of $526.21 as compared with 1935-39.


James Sinclair: What did they get in 1935
in the way of old age pensions?


Frederick Davis Shaw: I am going to deal with that
in a moment.


Stanley Howard Knowles: They got $20 and the $40
they now get is worth only $22.


Frederick Davis Shaw: It is quite conceivable that a
man living in Alberta who is eligible for the maximum of $50 per month would have a wife who was under 70 years of age. All that couple would receive would be $50 per month or $600 per year, which would represent an effective purchasing power of $307.69 as compared with 1935-39, or $25.64 per month. Remember I am referring to Alberta where the maximum pension is $50 per month. If that same couple happened to live in a province where the man received only the basic pension of $40 per month, it would mean they would have only $480 per year which would represent an effective purchasing power of $263.73, or $21.97 per month.
When I came into the house in 1940 the basic pension was $20. We often speak in glowing terms of what we have done for our pensioners, but when you consider that in a period of 11 years they are getting only $1.97 more per month on the basis of a pension of $40, instead of speaking about what we have done for them I think we should speak about what we have done to them.
Let us not forget that under our pension act as it stands today all recipients must be 70 years of age. A basic pension of $40 per month represents an effective purchasing power of $263.73 per year or $21.97 per month. As I said before, it may well be that a pensioner has a wife to support. Let us consider this 25 per cent increase in the sales tax as applied to those persons.
Let us not forget at the same time that there are thousands and thousands of persons in this country who are working but who are not receiving very much more than old age pensioners.
When the resolution was before the house we took strong exception to the fact that the government was putting us in the position where we either had to accept the eight propositions contained in the resolution or reject them all. I took the position at that time that I was prepared to reject them all, and that accounts in part for my vote yesterday in connection with the six months hoist. I do recall that the Minister of Finance at that
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time laid great stress upon the fact that we would have the opportunity to vote upon each section of the bill. I assume that that is exactly what we are going to do.
I propose asking you to put the question to the committee in connection with each section so that we may have the opportunity of recording in unmistakable fashion our attitude toward the proposed 25 per cent increase in the sales tax. Because of the fact that on at least two previous occasions I have expressed my views with respect to this matter, I do not intend to take any further time now repeating my former arguments.


Douglas Charles Abbott: My hon. friend is quite right.
I think this is the time when it would be appropriate to have a vote on this particular section after the discussion is completed.


Major James William Coldwell: I do not think there is anything one could add to all the arguments against this tax that have been made in the house lately. I know of no new argument.
I am merely going to say once again that I think this is an oppressive tax which affects those who can least bear it as well as those who can. During the budget debate I made the suggestion that if we were going to have taxes of this description, both excise taxes, as I pointed out a few moments ago, on what I believe to be necessities under certain conditions, and sales taxes, certain utility goods at least should be exempted from both the excise and the sales tax. I still think that something of that sort should be done. That is the reason why I suggested a few minutes ago that the classification should be sheepskin under all circumstances.
With respect to clothing a case might be made out for taxing expensive and luxurious clothing, but the clothing worn by the ordinary working people and children of this country, utility wear, should certainly be exempt from these taxes. While arguments have been made by many members on this side of the house against these taxes, I would also have liked to see some members supporting the government, who in many respects feel the same as we do about this matter, rise and express their views. I do not think it is a healthy condition in this country to have a government in office with such a large majority, and yet its supporters generally do not rise and express the opinions that I believe their constituents expect them to express, and indeed the opinions that I have heard some of them express outside the house from time to time. I think it would be a good thing if hon. members on the government side of the house would rise in their places and support the opposition on some of these measures that I am certain are as

Excise Tax Act
obnoxious to them as they are to us. As 1 said, I think all the arguments have been made.' I wish the minister would rise and say thgt, in view of the large surplus he obtained in April, he is prepared to withdraw this particular clause. I think we could then proceed with our business more expeditiously than we have been.


Douglas Charles Abbott: As my hon. friend has rightly pointed out, there can be endless argument as to the particular type and weight of taxes. I think the pros and cons of the sales tax have been pretty thoroughly and effectively discussed in the course of debate at the resolution stage and at this time. There is certainly nothing I can add to what I said in my budget speech and in the course of the discussion on the resolutions as to why I consider that this tax is both necessary and desirable at this time, and there is nothing that I propose to add. I think it is quite appropriate that there should be a vote on this section which is the one that increases the so-called general sales tax from 8 to 10 per cent. When hon. members have completed the discussion, which I hope is nearing an end now, I shall be quite happy to have such a vote taken. I think it has been made quite clear by all members of all opposition parties that they are opposed to the increase.


Major James William Coldwell: The unfortunate thing is that in a situation of this sort so many members are absent attending committees.


Douglas Charles Abbott: I appreciate that.


Major James William Coldwell: The veterans affairs committee, with its very large membership, is sitting, and also the elections act committee. That means of course that a vote in the house at the present time would not reflect the opinion of the house.


Douglas Charles Abbott: I think my hon. friend is quite right that a vote in committee at a time like this, when a great many members are absent attending other committees, does not really indicate the total voting strength of the house or the total views with respect to the particular section, but that is the method we have of doing it. One can always pass the section on division. To make it quite clear, so far as I have been able to sense the feeling, every member of all three opposition parties is opposed to this increase. Certainly all those who have spoken have indicated that they are opposed. If it is the desire to take a formal vote in committee now I shall be very happy to have that done, or if the committee feels the sense of all parties has been pretty clearly indicated we can call the section and it can certainly be carried on division, whichever the committee prefers.

' Mr. Knowles: What is the feeling on your side?


Mr. Hees:: The government has made it quite clear that it is going to put through this increase in the sales tax because it believes it has to have the extra money that this device will raise. To me the sales tax, as has often been said on this side of the house, is a bad tax, and I think all of us are most sincere in the reasons we put forward. We feel it is a bad tax because it imposes an equal burden on the poor man and the wealthy man in exactly the same measure.
I feel that the income tax and the corporation tax are eminently fair methods of raising money. The Minister of Finance believes he has to have the money which the increase in the sales tax will provide. My suggestion is that, instead of raising it by a method which I think the majority of people in the country feel is unfair, and which members of the opposition have argued many times is unfair, the minister should be willing to raise the money by a method which I think all members of the house and most people throughout the country would agree is fair, by an increase in the income tax or in the corporation tax, or both.
I do not think we have had a satisfactory-explanation from the minister as to why increasing those taxes and not imposing the 25 per cent increase in the sales tax would not be a preferable method. Would the minister give us a short explanation of why it would not be preferable to raise this money, which he seems to feel-and perhaps rightly-that the country needs to raise at this time, by increasing the other two taxes?


Douglas Charles Abbott: I am sorry, but I really cannot add anything to what I said: in my budget speech on this matter. So far as the corporation tax is concerned, we had a very interesting, and. I think very illuminating, discussion thereon following' the speech made in committee by the hon. member for Peace River. So far as the choice between the personal income tax and the sales tax is concerned, I indicated in my budget speech that I felt under existing conditions an increase in the personal income tax would be inflationary whereas a tax on spending, which does not affect incentives, would not be inflationary. I do not want to traverse all that ground again. If my hon. friend will do me the honour of reading carefully what I said in my budget speech on this subject, and if he will review what I said in the course of the debate on the resolution, I think he will see that I outlined as clearly as I was capable of doing why I felt that it was desirable to spread the load in this way. The Minister of Finance has the unfortunate responsibility-

but it is his responsibility-of deciding what recommendations he will make as to how the total burden must be shared1. I have indicated that. I sincerely believe that the way in which I have endeavoured to apportion the load this year is the fairest and best under the existing circumstances. If I did not think so, I would not have put it forward. I am under no illusion that imposing a sales tax or any ta& is a popular thing to do, but I have the responsibility of trying to determine the best type of tax under existing circumstances, and that is what I have done. I have given the reasons for it to the best of my ability, and there is nothing I can add now to what I have said already.


Stanley Howard Knowles: I find it difficult to follow the minister's line of reasoning when he suggests that an increase in the income tax would be inflationary but that an increase in the sales tax does not have that effect. As I see it this increase in the sales tax increases the cost of living. It increases it for the people in lower brackets where immediately there is felt the need for larger wages and salaries to meet that increased cost of living. It seems to me that anything that increases the cost of living runs the risk of helping along the spiral of inflation. On the other hand the income tax, particularly if it is applied on a graduated basis with the result that to some degree it is taken from those in the upper brackets, to a large extent cuts down luxury spending and does not have the direct effect in increasing the cost of living that the sales tax certainly has. I am unable to follow the minister in the reasoning that produced the sort of statement he made a moment ago.
I have one other thought to express, and I might as well do it while I am on my feet now. When we have urged as an alternative to the increased sales tax some other taxes such as an increase in the tax on spirituous liquors, for which the hon, member for Springfield voted when I moved an amendment some time ago, or when we have urged that there be increases in the corporation tax, the minister has taken the position that there are times when the point is reached beyond which taxes cannot be increased. His point is that the people concerned just cannot take any further increase in taxation. Well, if he is going to apply that argument to taxes on spirituous liquors and corporations, I would ask him if he does not think the point beyond which further taxation cannot be applied is already reached when the sales tax is at 8 per cent. From the fact that he is raising it to 10 per cent I take it he does not think so, but I believe it would mean something to the
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house and the country if we could have an assurance from the minister that it will not go any higher.


Douglas Charles Abbott: I do not want to reopen the debate on the point my hon. friend has raised as to why in the circumstances I think an increase in personal income tax would be more inflationary than a tax on spending. My experience has been that under existing conditions an increase in the income tax means that those paying the increase-and I am referring particularly to the larger groups of organized labour-are not prepared to accept less take-home pay. In other words they feel that they should get a wage increase which would offset any additional tax. I am not going into any elaborate economic argument here, but I make the assertion that unless the over-all production of this country is increased taxes must and should decrease the standard of living in order that a place may be made for the additional defence effort. I have reiterated that time and again. The committee stage is not the time for me to repeat it, but I will say that this is the view of every responsible, competent economist or student of these matters, though I do not offer that as a justification. The tax program I have produced here is the one I believe is best designed, as far as that phase of a fiscal program can do it, to damp down these inflationary forces. I do not claim to be omniscient, as I said before; I may be mistaken, but that does represent my best judgment.
I have answered my hon. friend as to why we think a tax on spending, such as the sales tax, is less inflationary than an increase in the personal income tax or a lowering of the exemptions; because I believe the imposition of such an additional tax would at once result in fairly widespread demands for wage and salary increases to offset it. Under existing conditions a very substantial portion of any such wage increases would be made without any corresponding increase in production, and that is inevitably inflationary. I do not think I have anything else to add; I believe my views are pretty well known. No doubt my hon. friend and others differ with them, but there is really nothing I can add to what I have already said a dozen times.


Stanley Howard Knowles: Does the minister not recognize that an increase in the cost of living makes workers feel that they need higher wages, and rightly so, just as readily as does a loss in take-home pay due to an increase in the income tax?


George Harris Hees: I think that is a very important point. The minister has put forward two reasons which I do not think hold water. One

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is that wage earners are going to demand more money if there is an increase in the income tax. They are going to demand higher wages in exactly the same proportion if the cost of the goods they have to buy is increased by increasing the sales tax. So I do not think that argument holds water. Then the minister said we must decrease the standard of living by increasing the sales tax.


Douglas Charles Abbott: No, I did not. I said if we did not increase production to make up for that $1,700 million defence effort, we must reduce our standard of living. I have said that a dozen times, both in this house and elsewhere.


George Harris Hees: You do exactly the same thing if you increase the income tax, because in just the same way a man simply does not have the money to spend; it is taken from his income, so what is the difference? My argument and that of other opposition speakers has been that it is much fairer to impose an income tax because the people in the lower income brackets do not pay as much, while those in the higher income brackets pay more because they are better able to pay. Is that not a fair statement?


Douglas Charles Abbott: That is a matter of opinion.
Perhaps it is unfortunate for the country, but at the moment my hon. friend has not the responsibility of being Minister of Finance. I can only repeat what I said a few moments ago, that I have put forward a program which I honestly believe is the best I have been able to devise. My hon. friend may be right; I do not know. I do not think he is, but I do not suppose either of us will ever convince the other.


Major James William Coldwell: I do not think anyone will disagree with the statement that if we are going to increase our expenditures in all kinds of ways, both for social security and for defence, we shall have to increase our production. We all agree with that. Our quarrel is with the form of taxation the minister has adopted.


Douglas Charles Abbott: We are quarrelling about methods.


Mr. Sinnott:: I have been waiting for some time to get in a few words. While I have been as opposed to this tax as any man in this house, we all know that in a very short time the government will have to dig up an additional $350 million to provide for the old age pensioners and so on. I am not a member of the government, but I suppose if they did not have a few backbenchers like me around the government would not be here very long. I have had several telephone calls from various quarters suggesting methods of raising money rather than through

the sales tax. As I intimated before, in order to give people an incentive to work we should give them some income tax relief if they produce more than they produced in the previous year. However, the minister and his parliamentary assistant have not seen fit to adopt these suggestions.


John Lambert Gibson: That is a pretty good idea,
too.	*


John Sylvester Aloysius Sinnott: The hon. member for Comox-Alberni is a large income tax payer, and when he approves the suggestion I do not think the idea can be too bad. However, in the past this government has made mistakes and has always been big enough to come back to parliament and admit them. If the Minister of Finance finds that the increase in the sales tax is not the proper thing to do, then I hope next session he will cancel that increase.


Frederick Davis Shaw: Just so the record will be kept straight, may I remind the hon. member for Springfield that before the new old age pension scheme comes into force he will probably realize that there is to be a new tax imposed for the purpose of financing such a scheme. This increase is not designed for the purpose of financing any new old age pension scheme.


John Sylvester Aloysius Sinnott: That is only your idea.


Frederick Davis Shaw: You wait and see. I was on the committee.


Mr. McLure:: Are all duties on imported goods subject to the ten per cent sales tax? This is one of the greatest injustices of the tax, and there are many injustices. The other day I happened to be getting some goods out of customs for an importer. The duty on the goods brought in from Great Britain amounted to fifty cents per pound. Then on top of that, as the man at the wicket said, you have to pay Abbott's tax of ten per cent. I rather objected to it, and I said I did not think they meant to go into all the crevices for this ten per cent. He said that was the way they interpreted the act, and I would have to pay it. I said that we would have to pass it on to the next fellow who handled these goods. I found that all duties were subject to this ten per cent sales tax.


Douglas Charles Abbott: The general rule is that sales tax is on the duty-paid value of the goods, but, of course, there are some exemptions. Therefore, it would not apply to all goods, although they may be subject to duty.


Stanley Howard Knowles: We disagree, the minister and I, as to this rise from eight to ten per cent. But there is one question that I asked which the minister has not yet answered.

Will the minister not agree that at ten per cent he has reached the maximum to which this sales tax should ever go?


Douglas Charles Abbott: I have always refused to answer hypothetical questions about a rise in taxes. I think it would be most improper for any Minister of Finance to express an opinion in advance that any tax had reached the limit. I do not know what charges this country may face; I do not know what burdens may be put upon us. Whatever burdens they are, they have to be paid for. So long as I have the responsibility, or future ministers of finance have the responsibility, that duty is to try to apportion the burden as fairly as possible. I shall venture no comment as to the maximum level of any tax.
Section agreed to: Yeas, 42; nays, 28.
On section 7-Hearing by tariff board.


Donald Methuen Fleming: Mr. Chairman, coming as it does after section 6 it is well that we should have in section 7 a provision that is bound in principle to receive the support of the house. I believe members will be glad to see the procedure provided in this proposed amendment in section 7 relating to the hearings before the tariff board. But I draw attention, Mr. Chairman, to the provision in the proposed new subsection 4 of section 115, which has the effect of limiting to six months the period within which applications for refund may be made. This smacks of the same kind of draftsmanship as we had the other day in a similar provision in the Customs Act dealing with an application for refund where a customs duty had been charged an importer at a higher rate than was proper. In that amending bill it was proposed that the period during which an application for a refund might be made should be reduced from three years to six months. As you will recall, there was a good deal of discussion and an amendment was introduced-in fact, two amendments before the house disposed of the bill.
Now, in this section 7 we have the same kind of proposal that no refund or deduction shall be made under section 105 as the result of any declaration of the tariff board under this section or an order or judgment under section 116 in respect of taxes paid more than six months before the date of the application to the tariff board for a declaration under this section. Mr. Chairman, while feeling that the section, apart from this provision, is improved by the amendment, I urge that the period of six months is unduly restrictive, and that the period within which an application for a refund may be made should be enlarged. I should like to see it enlarged to a year and a half, or certainly not less than twelve months.
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James Sinclair: In the present act, according to section 105 (5), a period of two years is provided in which to make application. This particular section only applies to appeals to the tariff board. The whole section, as the member has said, is one extending the rights of the individual. In the main act itself there is a continuing provision under section 105 (5) that there is a period of two years in which to claim other refunds.
The other point which the member raises is similar to the point raised on the Customs Act when it was before the house. An amendment was adopted giving the intention of the house that there should be a delay of six months before the provision became effective. The same provisions apply in this excise tax bill. I cannot move it under this section 7, but at the end of the bill I shall move an amendment similar to the one contained in the Customs Act, that this section shall not come into effect for six months. So that the member will have no illusions about this amendment, perhaps I should read it:
That subsection 4 of section 7 of this act shall be deemed to have come into force on December 1 1951.


Donald Methuen Fleming: This is not subsection 4 of section 7. It is subsection 4 of section 115 as amended by section 7 of the bill.


James Sinclair: Of this bill; subsection 4 of section 7 of this bill.


Donald Methuen Fleming: No. The subsection beginning at line 28 is not a subsection, of section 7 of the bill. It is the proposed clause 4 of section 115, as amended by section 7 of this bill.


James Sinclair: I agree; the reference to the main bill is the reference that the hon. member has just mentioned.


Donald Methuen Fleming: Is the government not prepared to enlarge this period of six months? I think you will agree, Mr. Chairman, that six months is a very narrow and brief period of limitation. The decision of the tariff board may be given at a time when the individual concerned is incapacitated for some reason or other. He may be out of the country temporarily. I would urge that a period of six months is an unjustifiably short period of limitation to put upon an application for a refund, where in fact the tariff board has said that an excessively high rate of taxes has been applied or a tax has been applied to an article that is exempt. Under these conditions, it seems to me that the whole-attitude of a government which has collected more taxes than it was entitled to, or has collected taxes where it was not entitled to them, should be one of anxiety to put things right. While the committee I am sure is

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commending the general purpose of the amendment, it will want to see this narrow limitation on the period given to that praiseworthy purpose removed or relaxed, so that the period may be a more ample one within which to bring application for a refund.
I would urge that this period of six months be lengthened to not less than twelve months. There is no administrative burden cast upon the Department of National Revenue, surely, by lengthening this period from six months' to twelve months. In a case like this surely we all wish to see right and justice done to a taxpayer who has been required to pay more than he should have, or to make a payment that he should never have been called upon to make, simply because the taxing officer who has had to deal with him has misread the law.
Under these circumstances, Mr. Chairman, I am asking for no great concession on the part of the government in enlarging this undoubtedly short period from six months to twelve months. The Minister of Finance is in the chamber. I urge upon him that the period of six months is altogether too short a period of limitation in a case of this kind. The taxpayer, in the situation I have described, should have no less than twelve months to bring application for a refund.


James MacKerras Macdonnell: May I
address a word to the committee before the parliamentary assistant answers? Surely this is a reasonable request, and surely we need not be met with a blanket negation. After all, we got to the stony heart of the Minister of National Revenue the other day and we should not despair here. Surely what the hon. member for Eglinton has said is true. There is no earthly reason to be harsh in this matter. Six months is little enough, surely, unless there is some real administrative difficulty which, so far as I know, has not been disclosed yet. This is an eminently reasonable request and should be granted.


James Sinclair: The Excise Tax Act and of course the Customs Act are quite closely related. Application for refunds would probably apply to both customs duties and excise tax paid on the same goods. The amending bill of the Customs Act which was passed here a little more than a week ago had this provision for six months. After all, it is not six months after the decision; it is six months before the time the application was made to the tariff board.
The hon. member for Eglinton suggests that perhaps the man who made the application and who paid the duty may be out of the country at the time. Surely the thing is of such importance to him that he is not out

of the country neglecting his business completely. The period is much more than six months when you consider the application to the tariff board and the period after the ruling. Six months was approved in this house ten days ago in so far as the Customs Act is concerned. Applications very often are for both customs duties and excise taxes which are paid on the same article, and therefore there is an advantage in the period being exactly the same as in the bill which passed through the house ten days ago. It is the opinion of the department that six months is ample for anybody, six months not from the judgment but six months back before the time the application was made to the tariff board. That is an adequate time to file for refunds.


[Stage Direction]
Section agreed to.
Section 8 agreed to.
On section 9-Inquiries.
Donald Methuen Fleming: I am interested in the amendment of section 117, particularly the first subsection. It is to be observed that the limitations in the section as it now stands are eliminated in favour of a provision as broad as this: The minister may designate any person to conduct an inquiry or investigation in matters relating to the act, and any person so appointed has all the power and authority of a commissioner appointed under part I of the Inquiries Act. I ask what has given rise to the proposed amendments, and, in the light of its experience in these matters, in what way the department has found the present section unsatisfactory.


James Sinclair: The effect of this amendment is to limit the carrying out of investigations to persons authorized by the minister, thus removing classes of persons or officers who were formerly empowered to carry out this inquiry by virtue of their office as specified in the act.
The other thing was that no authority was given, similar to part II of the Inquiries Act and the practice on inquiries varied from province to province. It was possible in one province for a person in contempt of inquiry to be sent to prison, and it is to make sure that there is a uniform practice in all ten provinces that this clause, which is again exactly similar to the clause in the customs bill amending the Customs Act passed here ten days ago, was incorporated.


Donald Methuen Fleming: The parliamentary assistant has not grasped the point that I was raising about this. The terms of the present section 116 are, in many respects, narrower than the provisions of the new proposed section 117, subsection 1. The persons who may be designated as a commissioner under the present

legislation are-limited to the deputy minister of the department, the assistant deputy minister, the legal officer or -any other officer authorized by the minister from time to time. The effect of the substituted provision, the new section 117, subsection 1, is to enlarge that clause without limit. The minister may appoint any person. I am asking, what has given rise to the apparent feeling that the present class, as drawn from within the ranks of the department, is too narrow and that the minister should have power to appoint any person as a commissioner to carry out the functions which may be assigned to such a person under the act with the powers and authority of a commissioner appointed under part I of the Inquiries Act.


James Sinclair: I think the hon. member has been reading old section 116, which specified the specific officers of the Department of National Revenue, but then there is this other phrase: "or any other officer".


Donald Methuen Fleming: Officer.


James Sinclair: A Royal Canadian Mounted Police officer, for example. Normally, such inquiries would not be conducted by the deputy minister. In the old days when the business of the department was comparatively small that might be so, but today these specific inquiries on various technical matters connected with the taxes on new products, for example, are going to be assigned to people who are qualified to conduct these investigations. The authority actually was there in section 116, but it is much easier to spell it out as it is now in section 117. Again this is exactly the same authority as was included in the customs bill of ten days ago. The two bills are pretty well parallel.


Donald Methuen Fleming: The fact that it is in the customs bill is no reason why the point should not be raised here, or why we should be satisfied with anything less than a clear and ample explanation. The parliamentary assistant has indicated that there may be cases where, because of technical considerations, if I understood him correctly, there may not be an officer of the department with the technical knowledge which would qualify him to sit as commissioner in a particular inquiry or investigation. I suggest the committee will wish to be sure that this power of appointing persons without limitation is one which will be exercised with some degree of good sense. We do not wish provisions of this kind to be made occasions for the distribution of patronage favours hither and yon. I think hon. members would like to feel that, with the experience people in the department
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have in dealing with such matters, there are people in the department competent to act as commissioners in such situations.


James MacKerras Macdonnell: I should
like to raise a question in connection with that. I was somewhat taken aback by what seemed to be the implications in what was said a moment ago by the parliamentary assistant. He spoke about people technically qualified, and by that I thought he implied that it would be natural, in these wide-open powers, let us say in connection with a technical matter, to appoint some entirely technical person.
I suggest that would be open to very serious question, because an inquiry is a matter which affects the rights of various people. I agree entirely with the hon. member for Eglinton that it may very well require a rather wide experience such as we are entitled to assume will have been had by senior members of the civil service. I suggest the parliamentary assistant might give us at least some indication of the kind of persons who are to be used for these purposes, because certainly I would deprecate the idea that someone who happened to have a considerable amount of technical knowledge on some subject should be designated for this duty, and also charged with the civil rights, let me say, of the person concerned.


James Sinclair: In the past certainly no one but a legal officer of the Department of National Revenue or the Royal Canadian Mounted Police has been entrusted with such an inquiry. But I have also heard the charge made in the house-certainly in Ottawa-that the national revenue people are living -in ivory towers, remote from business, and do not know the practical problems of the businesses they are taxing.


Donald Methuen Fleming: That is the government.


James Sinclair: No, it is not the government. The government certainly is in touch with the people every four years. The fact that we are in touch with them is amply shown.


James MacKerras Macdonnell: This is a serious discussion.


James Sinclair: The suggestion is that these -people in the national revenue organization are bureaucrats in ivory towers, remote from business.


Mr. Ferguson:: You are not in touch with the people; you touch the people.


James Sinclair: Touch their hearts.


An hon. Member:: Their pocketbooks.


James Sinclair: But in the House of Commons the charge with respect to bureaucracy and

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ivory towers has never been levelled against members of parliament. It has been levelled against people in departments, who are charged by some businessmen with being remote from business and with living in ivory towers, so that they are remote from practical business developments.
There is no doubt that under this section most of the inquiries again will be conducted by legal officers of the department. But this does give the minister authority, if need arises, to designate other persons who are qualified to conduct an inquiry. I would repeat that we have similar legislation in connection with the customs tariff.


[Stage Direction]
Section agreed to.
On section 10-Schedule I repealed and re-enacted.
Stanley Howard Knowles: Mr. Chairman, in what way do you wish us to deal with section 10 and with schedule I, which is referred to in section 10? My reason for asking is that I do not want to let the section pass, only to find that I am denied the right to discuss schedule
I.	What I would like would be the opportunity to deal with some of the paragraphs in schedule I. Perhaps you could tell us the manner in which you would like the discussion to be conducted.


Donald Methuen Fleming: The point raised by the hon. member is one which has been giving me some difficulty. If we dispose of section 10 before taking the schedule, our rights in respect of the schedule may be severely curtailed by reason of the fact that an acceptance of section 10 would have the effect of enacting the schedule.
Schedule I is four pages in length. I would ask that you call this schedule along with section 10, and call the schedule paragraph by paragraph. I believe this would contribute to an orderly discussion, because there are sixteen paragraphs in the schedule. The discussion would be confused if we did not take them in order.


Douglas Charles Abbott: I believe it would be appropriate to discuss section 10 and schedule I at the same time. It is understood of course that, while the schedule is long, it simply substitutes "twenty-five" for "fifteen". That is the only change it makes. There are no new articles.


Donald Methuen Fleming: Yes, there are three other amendments.


Douglas Charles Abbott: It adds electrical appliances.


Stanley Howard Knowles: That is the whole point.


Douglas Charles Abbott: Beyond that, however, the effect of the schedule is to increase the amount from 15 to 25 per cent.
[Mr. Sinclair.1


Donald Methuen Fleming: And there is another amendment in paragraph 3 as well.


Douglas Charles Abbott: That is a minor amendment, adding the words "or apartment" in the general definition of electrical appliances. However, that is not a substantial amendment.


Donald Methuen Fleming: We had experiences on the resolution stage, which should make us seek to arrange orderly procedure and to take provisions or resolutions seriatim. I suggest there would be considerable confusion if the whole of schedule I were taken as one matter. I do urge that we would have a more logical, a clearer and, in the end, a briefer discussion if the paragraphs in schedule I were called seriatim.


Douglas Charles Abbott: It is not as complicated as that. There are two issues involved, the first of which is the increase in rate from 15 to 25 per cent, and then the inclusion of the group of household appliances. It should1 not be difficult, when discussing the section, to refer to those two points. However, whatever the committee decides is the more orderly way of proceeding would be satisfactory.


Stanley Howard Knowles: I think the minister is oversimplifying what schedule I does. He has said it does only two things, the first of which is to change 15 per cent to 25 per cent in some cases, and-


Douglas Charles Abbott: And a reduction of candy to 15 per cent.


Stanley Howard Knowles: The second one to which he referred was the 15 per cent on refrigerators, stoves and washing machines; and he now adds a third one. I would point out that the increase from 15 to 25 per cent refers to a number of different classes of goods. While it might be acceptable to increase from 15 to 25 per cent in some cases, it might not be in others. I do suggest that we should consider that we are on section 10 and schedule I conjointly, and that we should take up schedule I paragraph by paragraph.


Douglas Charles Abbott: I suggest that we can only vote on section 10 as a single section. That is consistent with the stand I took when we were in the resolution stage. I am quite ready to agree to have the discussion take any form that is most convenient to the committee, but if we are going to stick to the rules we should vote on section 10 as section 10.


Stanley Howard Knowles: We are not in committee of the whole on the resolution, we are in committee on the bill. When we are in committee on the bill we have the right to take the clauses one by one, to take up the schedule by itself, and then consider the preamble and the title. When you get to the schedule you find that it is not just one

long sentence strung together by commas and semicolons. This schedule is a series of separate paragraphs that are numbered separately and that end with periods. I submit that in discussing the schedule it is our right to discuss it section by section, although it is immaterial to me when we discuss it.


Douglas Charles Abbott: Let us not get into another of these long procedural arguments that take so much time. Would it not be better to take the schedule first and discuss it and then come back to the section?


Stanley Howard Knowles: That is all right if we take it section by section.


Douglas Charles Abbott: My hon. friend is saying that the committee has the right to take it section by section and I have not quarrelled with his statement.


The Deputy Chairman:: Perhaps we should allow section 10 to stand and then take up the schedule.


Some hon. Members:: Agreed.
Section stands.
On schedule I.
On paragraph 1.


Donald Methuen Fleming: I assume that apart from revenue one purpose of the minister is to channel the productive capacity of the automotive industry into war production. Can he tell the committee whether there has been any result created in that direction since he announced this particular tax in his budget?


Douglas Charles Abbott: I am not too familiar with that. I know that in March sales of new motor vehicle units were by all standards at an all-time high, being somewhere around 49,000 units. In April the sales were slightly lower at 46,300 units. I have not the figures for May. I would not put the purpose of the tax in exactly the same terms used by my hon. friend, but it is a tax on an article which does compete with war industry, not only for labour but for steel and so on. The combined revenue and other effects made it seem desirable that this additional tax should be imposed. As I say, I have not the May figures to indicate what the result of the additional tax has been.


Donald Methuen Fleming: Am I wrong in thinking that one purpose of this increase in the tax of 25 per cent was to reduce the manufacture and sale of motor cars?


Douglas Charles Abbott: It was hoped that it might have some such effect because the consumption and production were quite high.


[Stage Direction]
Paragraph agreed to.
Paragraph 2 agreed to.
Excise Tax Act
On paragraph 3.
Donald Methuen Fleming: Referring specifically to subparagraph (a) of this paragraph, can the minister tell the committee what is the content of the proposed amendment? It is now proposed that the definition of electrical appliances shall be broadened. Previously the definition adopted was in terms of those adapted to household use, but it is now to be household or apartment use. What are the particular electrical appliances which were not previously taxed under the general description of those adapted to household use which are now going to be taxed under the description of electrical appliances adapted to household or apartment use?
I am not going to embark upon a repetition of the whole discussion we have had on the subject of the application of the excise tax to these commodities. Those covered by paragraph (a) were previously subject to a 15 per cent tax, while those covered by paragraph (b) were hitherto not taxed. The general effect of the two paragraphs has been to single out the industry engaged in the manufacture of certain named electrical appliances for a special kind of tax. I think that is discriminatory.
I should like the minister to state why the electrical appliance industry has been singled out for this discriminatory tax. The proviso at the top of page seven indicates another discriminatory feature of the tax. It states that the tax shall apply only to that portion of the appliance designed for other than solid fuels. Certain appliances will be subject to the tax while other appliances, such as stoves using a different type of fuel, will not be subject to the tax. That is necessarily discriminatory. It brings us back to this question: If the minister does need revenue, why should a particular industry like this be singled out for a tax which is not general in application but which in its result is highly discriminatory?


James Sinclair: As far as the first point
raised by the hon. member for Eglinton is concerned, the addition of the words "or apartment" in paragraph (a) is made necessary because of the new paragraph (b). In paragraph (b) the words "appliances adapted to household or apartment use" are used. The easy phrase would be "domestic use". However, in many apartments the refrigerator system is made up of one compressor in the basement with a refrigerator unit in each apartment. Obviously such an appliance would not be covered by the word "household". It would not be covered by the words "domestic use." The expression was expanded

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to "household or apartment use" in paragraph (b), and for the sake of uniformity the same expression was used in paragraph (a).
Then as to why this special tax should be imposed. There are two reasons for this. The minister gave the first reason when delivering his budget speech, and I also emphasized that when I spoke. The primary purpose is to raise revenue, to make possible our defence preparations and to provide the domestic services of the federal government.
There was a second purpose, as the minister indicated. These taxes were intended to have a counter-inflationary effect where there was an element of competition with defence industry. The hon. member for Eglinton mentioned the automobile industry, but if there is one industry where there is a high element of competition with our defence industry, it is the electrical industry. This is true not only with regard to the use of materials such as iron and steel, but particularly so in the case of copper. I used a striking illustration of the Anaconda Copper Company and the amount of copper necessary to construct a tank or a bomber as compared to the amount used in an ordinary kitchen. In this particular instance we have real competition both in materials and in the type of labour necessary to produce the many electronic devices used in war.
Then with regard to the exemption of appliances designed to use solid fuels, may I say that these were exempted during the last war. Coal or wood stoves are used generally in farming and outlying areas. We followed the same taxation policy in the last war, although with higher rates of taxation. In connection with these combination stoves we determine the electrical content of the stove as distinguished from what you would call the ordinary coal or wood part. We are now carrying out exactly the same provision today as we did when a similar tax was applied during the war. This action was explained at some considerable length during the resolution stage.


Donald Methuen Fleming: There is one special point. In raising it I do not wish to distract attention from the main feature here which is the question whether there should be a tax on these articles at all. In both 3(a) and 3(b) we have a provision which opens in general terms and then follows with a detailed enumeration preceded by the abbreviation "viz.". I notice that section 3(a) reads:
Electrical appliances adapted to household or apartment use, viz. . . .

Then follows the enumeration, chafing dishes, coffee makers, and so on. In 3(b) we have a similar expression. It reads:
Appliances adapted to household or apartment use, viz., stoves, hot plates, grills and other appliances ...	[DOT]
I think there is a point of interpretation that ought to be cleared up at this stage. Does the Department of National Revenue propose to apply this schedule with this effect, that the enumeration is not necessarily exhaustive, but if they can find anything that falls within the definition of electrical appliances adapted to household or apartment use it becomes taxable even though it is not one of the particular articles singled out in the enumeration that follows? The same question arises in 3(b). If these articles are simply set out here for the purpose of illustration or example one would have expected the abbreviation "e.g.". I have not seen the French version of the bill. It may be that it will throw some light on the question. As I understand it, "viz." is an abbreviation of videlicet, and it has not the same meaning at all as "e.g." or exempli gratia. What is the interpretation that the department is going to place on this expression? In other words, are the governing words going to be the opening and general words or are they going to be the specific enumerations which follow the general words? I can well imagine that no matter how carefully the draftsman may have sought to set out a very detailed enumeration, he may not have covered everything in the way of electrical appliances concerning which an attempt may later be made to apply the tax.
I have now been handed the French version, and see that 3(a) reads as follows:
Appareils et materiel electriques adaptes a l'usage de maisons ou appartements, soit couvertures; chauffe-plat . . .
Similarly in 3(b) it reads, "soit cuisinieres". After the general words we have the one word, "soit".


James Sinclair: The intention is to carry on the practice of the department up until now, and that is indicated by the use of the word "soit" with these specific articles mentioned here. If they are not mentioned they are not going to be covered, with one exception. If the hon. member will look at 3(b) there is one fairly general class, "stoves, hot plates, grills and other appliances when adapted wholly or in part for cooking". If some new method of cooking were devised then it could be included under this one omnibus section, but otherwise the items specified are the items on which the tax will be collected, and items not specified will not be taxed.


Donald Methuen Fleming: Is that a solemn assurance from the parliamentary assistant on behalf of the government that this section will not be applied to any electrical appliance adapted to household or apartment use unless that particular article is specified in the detailed enumeration that follows "viz."?


James Sinclair: That has been the practice of the department, and that will continue to be the practice with the one exception of this blanket clause in 3(b) as far as cooking appliances are concerned.


Donald Methuen Fleming: To what other cooking appliances could that particular clause apply other than stoves, hot plates, or grills when adapted wholly or in part for cooking and when designed for using other than solid fuels? What appliances could that refer to?


James Sinclair: As an example of development, you will remember that four or five years ago they brought out these little electric portable roasters which actually they advertised as complete outfits for small apartments. That type of thing is an example of development that may take place. We may well have a similar development so far as cooking stoves are concerned, and it is to cover that. Aside from that, the practice of the department has been that the article must be specified. If it is specified here it is taxed. If it is not specified here, then there is no 25 per cent or 15 per cent excise tax.


Major James William Coldwell: What is the significance of
the words "adapted to household or apartment use"? Does that mean that restaurants, hotels and so on will be exempt from this tax?


Douglas Charles Abbott: Yes, the article is part of the cost of production.


Major James William Coldwell: You consider that to be
like tools of the industry.


Douglas Charles Abbott: That is right.


Major James William Coldwell: They would be exempt
from taxation.


Douglas Charles Abbott: Correct.


Robert Ross (Roy) Knight: The hon. member for Eglinton attacked the tax from the point of view of the manufacturers of electrical appliances. I should like to go to the other end and say a word for the consumer. I am opposed to this tax to the degree that it militates against the introduction of labour-saving devices in the home. I want to say a word particularly about washing machines under 3 (b). It refers to "washing machines operated by electric or other power". So far as the words "other power" are concerned, I am thinking
Excise Tax Act
about manpower, human power. Unfortunately it is not manpower. It is woman-power in a great many homes, and that is what I am thinking about. I am thinking of the wife in the farm home, or in the city or town home for that matter. It appears to me that this is a drive against the installation of modern labour-saving devices.
In the province of Saskatchewan, with a widely scattered population, we have had considerable success in the matter of electrification. It has been slow but we have made a start. Many women are looking forward to the day when they can have electric lights, and when they will not have to push that handle back and forth for an hour or two every time they wash.


John Lambert Gibson: Use that $65 million for that.


Robert Ross (Roy) Knight: 1 think the government should be encouraging rather than discouraging the installation of such devices. I think taxation on such articles will be a bitter disappointment to the people about whom I am most concerned. I can see no single justification for this particular tax unless it is on the ground of the amount of steel that will be saved for the country in what is considered by many to be an emergency. I do not think the amount of steel that will be saved on that one item is going to be very great in relationship to the vast quantity of steel that may be needed. I can see no justification for this tax. As long as a woman will push that handle all day long in the heat of a little kitchen in order to wash her clothes, it is quite all right, but let her go get her husband to hook up her washing machine to a little gasoline engine, or let her use the electrification to which they have been looking forward for years, and the government comes along and says: All right, if you want to instal that particular type of machine you will have to pay for it as if it were a luxury. I think the washing machine item should be deleted from this particular clause.


Wilbert Ross Thatcher: Yesterday or the day before the Canadian Manufacturers Association met in Montreal, and the president made a statement that I thought was at least significant. He stated that so far as these appliances were concerned the slack in consumer demand was not being taken up by armament orders from the government. Mr. Holding, who is the president, made this statement:
Yet except for a few selected industries such as the manufacture of airplanes and railroad equipment, I have seen little evidence that rearmament

Excise Tax Act
production will take up the slack in the employment of labour, plant and equipment which will be released1 by the curtailment in production of consumer goods.
So I am beginning to wonder. Obviously we do not have this tax for revenue; at least that is not its main purpose, in view of the surplus we had in the first month. It cannot be designed to conserve steel and other materials, because we are not using for defence production the steel and other materials we are saving by reducing the manufacture of consumer appliances. In the light of those facts exactly where do we stand? Is it still necessary? I would like the parliamentary assistant or the minister to tell me whether in recent weeks any manufacturers have made representations to the department that they are going to have unemployment in their industries if this provision is continued.


James Sinclair: Getting back once again to the primary purpose, that purpose was to raise revenue. In his budget speech the minister drew attention to the amazing rate of spending which had developed in recent years in connection with these articles. The example which sticks in my mind is refrigerators. The 1950 sales were double those of 1949 and three times those of 1948. I put the figures for automobiles on record previously, and the minister has said that the March sales of new cars amounted to 49,000 units. Everyone forecast that there would be a collapse in sales after the budget. Very early in April the hon. member for Peterborough West predicted a total collapse in automobile sales once these tax changes went through. In spite of the anticipatory buying in March by people who normally would have waited until April or May, the sales in April amounted to 46,300 new cars, so that is not much evidence of a collapse. Exactly the same thing is true as far as these items are concerned. The hon. member asks if these increased taxes, and I suppose he would also include the credit restrictions, have resulted in unemployment. He also asks whether the steel, copper and other materials which have been made available by the reduced sales-though as far as the government can see the sales have not been reduced very much-have been turned to war purposes. Well, war purposes or no, there is no surplus of either steel or copper in this country today.
To reply to the hon. member for Saskatoon, on the budget resolutions, the hon. member for Peace River asked whether this other power meant manpower, and I said it did not. The case brought forward was that of a farmer in Saskatchewan who has been operating a hand washing machine. He has

his farm electrified and wants to buy a little motor and hitch it up to the old washing machine. Well, the Department of National Revenue will not go to his farm and say, "Now you have an electric machine." But if he goes to the store and buys a new electric washing machine, of course he comes under this tax.


Robert Ross (Roy) Knight: Anyone in his right senses knows that you cannot hitch electricity to an old hand type washing machine. If there is some genius on the farm you might be able to get gasoline power on that washer, but everyone knows that electrification involves the purchase of a new electrical machine. I think the parliamentary assistant is over-simplifying the case.


James Sinclair: I certainly am not oversimplifying that case. I have a very large rural riding, too, to which electrification is coming, and I am always amazed at the ingenuity shown by the farmers and fishermen in adapting things from the old manual processes to electrification. However, that is a minor thing.


Robert Ross (Roy) Knight: They could live in sod houses, too.


Gordon Knapman Fraser: The parliamentary assistant
mentioned that I had spoken about cars and said they would be a drug on the market. I believe he will bear me out when I say that most manufacturers of cars in Canada have those cars out in fields by the hundred, unable to get rid of them, and every car dealer across the country has used cars he cannot sell.


Douglas Charles Abbott: Both manufacturers and dealers have been doing very well for the last four or five years. There was perhaps some anticipation of possible tax increases before the budget was brought down, and there might have been some inclination to stimulate manufacturers to load up the dealers. I would not know too much about that, but I do not think the situation is very serious as yet as far as either the manufacturers or the dealers are concerned.


Stanley Howard Knowles: A few moments ago the parliamentary assistant indicated to the hon. member for Rosetown-Biggar that a distinction is made between those appliances which are used domestically and the same appliances used in restaurants, hotels and so on. I should like to know whether for the distinction to be made it has to be a different type of stove or washing machine, or whether it is the case that a stove purchased for the home is subject to tax whereas the same stove purchased for a restaurant is not.


James Sinclair: The normal practice for a restaurant certainly would not be to buy the

ordinary type of stove adapted to household or apartment use. They would buy a stove of a different size, much bigger, and adapted to restaurant or other commercial use. The same would apply to a refrigerator. If the stove is of a type adapted to household use, the ordinary small household electric stove, and it is bought for use in a restaurant the tax would apply, because it would be a stove adapted to household or apartment use. The stoves and refrigerators used by ordinary restaurants and hotels are very different in character from those used in homes.


Major James William Coldwell: In a good many modern
apartment blocks they have Bendix washers which are operated by putting a quarter in the slot, or something of that sort. Would they come under this, since they would be adapted to apartment use? On the other hand within perhaps a block or two of the apartment you may have one of these washeterias, with the same type of machine also operated by putting a quarter in the slot. The apartment house owner put in the machines largely as a service to the occupants of the block, while of course the other people are running a business. Would there be a distinction between those identical machines, both operated by money in the slot but one placed in the basement of an apartment and the other in a building next door called a washeteria?


James Sinclair: The tax is levied when the manufacturer sells to the wholesaler. He does not know where the washing machine is going, whether it is going into one of these small washeterias on the main street or into an apartment. In the apartment, of course, it is obviously adapted to apartment use, the same as the refrigerator. In the case of the small washeteria it is a washing machine adapted to household use, and it pays the sales and excise taxes when the manufacturer sells it to the wholesaler. On the other hand some people make much larger washing machines which are not adapted to household use but which are used by commercial laundries, and of course they are exempt from the excise tax.


Stanley Howard Knowles: Then the test is not who finally purchases the article but the way it is constructed, or what it is adapted for?


James Sinclair: Yes, what it is commonly used for.


Stanley Howard Knowles: Does the parliamentary
assistant not fear that in this tax he is discriminating against those people who like to eat at home?


Gordon Knapman Fraser: If a person had something go wrong with his refrigerator and had to buy a new freezing unit, would the 25 per cent tax apply?
Excise Tax Act


James Sinclair: If the hon. member will look at paragraph 3 (b), at the end he will see:
-and complete parts thereof including coils, condensing or compressor units, motors, cabinets, boxes, evaporators and expansion valves.
They are all subject to the tax.


Louis-René Beaudoin: Shall the paragraph carry?


Some hon. Members:: Carried.


Some hon. Members:: No.


Some hon. Members:: On division.
Paragraph agreed to on division.
Paragraphs 4 to 7 inclusive agreed to.
On paragraph 8.


Donald Methuen Fleming: This is the paragraph under
which the excise tax is increased from 15 per cent to 25 per cent on trunks, suitcases, baggage and luggage of all kinds. Mr. Chairman, it is surely a great mistake to base any tax on the assumption that luggage of all kinds is necessarily a luxury. Even if additional revenue is required I believe we must have some regard, especially in times like this, to avoid increasing the cost of things that are necessities of life. In certain cases luggage is undoubtedly a necessity. Now, I would have been quite prepared to accept without question the necessity for a tax on some of the articles enumerated in paragraph 8, if some serious attempt had been made to distinguish between those that are of utility quality and those that are of luxury quality. There is no attempt of that kind made here at all. I wish to record my feeling that there is a grave injustice being done here to a particular industry, the leather goods industry, when there is not the slightest attempt made to distinguish between those forms of goods which are luxuries and those which are necessities.


James MacKerras Macdonnell: I should
like to support what the member for Eglinton has said. I have always felt that in the case of the tax on leather goods, there is no rhyme or reason whatever. In a good many of the other cases I think I can see some reason, but here it seems to me there is a clear case for making a distinction. Presumably it would have to be made on the basis of cost or something of that kind, but no attempt has ever been made to do it.


Mr. Jones:: I agree with the two previous
speakers, but I think there is a distinction made here. There is a distinction made in the case of articles specially manufactured for a customer, and in that case it would be the better class of goods. If you are a wealthy individual and can afford to have something

Excise Tax Act
specially made, you are exempt from taxation. But if it is a necessity and you have to go to an ordinary store to purchase it, you are subject to the tax. I believe the section is wrong.


James Sinclair: The distinction is so reasonable. If a doctor wants to buy a little black bag for his instruments or a travelling salesman wants a bag specially made to hold his goods, then he comes within this section and the goods are exempt from taxation. The tax is progressive so far as income is concerned, too. For instance, take the old age pensioner who travels to see his daugther. He buys a small cardboard suitcase, for say three dollars, and the excise tax he pays in that cost is less than 75 cents. On the other hand a rich man who goes down to Florida from Toronto to escape Toronto's winter probably has pigskin cases costing $500, so he has to pay a heavy tax under the twenty-five per cent rate. This is a good example. The higher the income group in which you are, the fancier your luggage and the higher tax you pay because of the twenty-five per cent rate.


Owen Lewis Jones: The words "manufactured
expressly for" should be removed, because a young man starting in business cannot afford to have luggage specially manufactured. He has to purchase it on the open market. If the exception were for suitcases and briefcases used for business purposes, then I could see the point. When the words "manufactured expressly for" are used, that excludes the man who has to buy the cheaper type of travelling case and briefcase. The man who could well afford to pay the tax in this case is exempted.


Mr. Drew:: This item should not pass with the explanation that has been given. It will pass, there is no doubt about that. But this explanation is just as specious as the explanation that was given for the tax on electrical equipment. On the one hand, we are told it is for revenue, and on the other hand we are told it is to cut production. No real facts have been given to demonstrate that either is the case. In this particular case the parliamentary assistant to the Minister of Finance has given one of those wholly specious illustrations about the rich man carrying the big leather case. As a matter of fact, he will probably find that those who are doing the kind of travelling he is talking about have adopted other kinds of cases.
In this particular instance the provision is not fair. Those who are in a position to get any of these things specially made are exempted, and those who are not must go in and buy the ordinary manufactured article

on which the tax is imposed. This is certainly going to pass, according to the attitude that is being adopted; there is no doubt about it. We see the same attitude right down the line: Who is going to stop us? But let us not pass this item with the idea that we are accepting the kind of explanation that has been given.


Mr. Browne (St. John's West):: I should like to support the previous speakers. Upon looking over the list it seems to me that purses, wallets, billfolds, key and card cases, dressing and toilet cases, shopping bags, golf and other sport bags, expressly manufactured for a customer, are the height of luxury and should be subject to tax.


[Stage Direction]
Paragraph agreed to.
Paragraph 9 agreed to.
On paragraph 10.
Donald Methuen Fleming: Mr. Chairman, when the minister seizes upon things like fountain pens to increase a tax that was already discriminatory and high, and to advance that tax from fifteen to twenty-five per cent, I think it is a further example of failing to take account of reality. Fountain pens are capable of being divided into those categories that may be regarded as luxuries and those that are strictly and unquestionably necessities. As for the latter type, surely no one is going to say that they are not a necessity of life. Why should they be singled out for a discriminatory tax? They were singled out previously for a fifteen per cent tax, so why should they be singled out again for another increase to twenty-five per cent when there has not been the slightest attempt to work out any statutory distinction between those that are a luxury on the one hand, and those that are strictly utility and necessary models.


[Stage Direction]
Paragraph agreed to.
Paragraphs 11 to 13 inclusive agreed to.
On paragraph 14.
Stanley Howard Knowles: Perhaps, Mr. Chairman, upon looking at the clock you will admit that it is six o'clock.


Louis-René Beaudoin: Perhaps with
unanimous consent we might complete the bill. There are only three more paragraphs and the other schedule.


Stanley Howard Knowles: There are three other sections, Mr. Chairman.


Louis-René Beaudoin: But one is schedule II, and the other withdraws a former schedule.


Douglas Charles Abbott: Perhaps we might take a few minutes after nine o'clock to consider these sections, Mr. Chairman.

At six o'clock the Speaker resumed the chair and the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.


Mr. David A. Croll (for Mr. Winkler) moved: the second reading of Bills Nos. 324 to 332.


Stanley Howard Knowles: One at a time, please.


Mr. Speaker:: I will call the bills one at a time.



MAVIS ELIZABETH THOMAS WRATHALL

David Arnold Croll: the second reading of Bill No. 324, for the relief of Mavis Elizabeth Thomas Wrathall.


Stanley Howard Knowles: Mr. Speaker, there is just a word or two I want to say on Bill No. 324. The last time these bills were up I asked that this one stand because the evidence had not yet been received. That evidence has now come to our desks, and I have read the evidence in this case. I have not heard that anyone else in the House of Commons has read it, and I draw attention to that. I take it that silence gives consent to the statement I have just made. Here we are, a court of 262 judges to pass upon this case, and it appears that only one of us has read the evidence.
I And that in this case there is one boy of four years of age. I find also that the husband has not been supporting either the wife or boy for some considerable time. That is authenticated by a question and answer on page nine of the evidence which reads as follows:
By Hon. Mr. Golding:
Q. Has he given you anything by way of support?
A. No, not one cent.
Then, another question:
By Hon. Mr. Kinley:
Q. Who supports you now?
A. I do; I am living with my parents, my mother and father, and naturally there is no room and board. I don't need that. I do all sorts of things to raise money. I consider myself a professional baby sitter, for one thing; last year I earned about $300 doing that. And I sell subscriptions to magazines, and I do all kinds of things to earn money.
I quote that bit from the evidence to indicate the position that this woman is left in, having to support herself and her four-year-old boy.
As for granting the divorce itself, the evidence does seem to point to adultery on 80709-238
Private Bills-Divorce
the part of the husband. This is a case of course where the evidence was obtained by two professional investigators, but it does seem to me to be authentic evidence. As one of the members of this House of Commons called upon to consider this case I feel that we have no option but to grant it, but I feel very very sorry there is nothing that we can do to require this man to assist in the support of his wife and his four-year-old son.
Motion agreed to and bill read the second time.



IDA COURLAND RUBIN FLESCH

David Arnold Croll: the second reading of Bill No. 325, for the relief of Ida Courland Rubin Flesch.
Mr. Stanley Knowles (Winnipeg North
Centre): Mr. Speaker, may I point out in connection with this case that at least hon. members can have the satisfaction of knowing that no children are involved. The wife, who is the petitioner for this divorce, when questioned as to what led to the situation that in due course brought on the divorce, seemed to have put it down to heavy drinking on the part of the husband.
This is another case where the evidence was obtained and presented to the Senate committee by two professional investigators. As a matter of fact, they were the same two investigators who presented the evidence in the previous case, and there is considerable similarity in the evidence. It does seem to be valid evidence, and yet as one who has now read quite a number of these cases at this session I cannot help but draw attention to the similarity of the evidence case by case.
This is another one where I feel that as a group of 262 judges we have no option but to grant the divorce, but it is an unhappy duty that devolves upon us.
Motion agreed to and bill read the second time.



YVONNE WINIFRED KATHLEEN WALKER ANDREWS

David Arnold Croll: the second reading of Bill No. 326, for the relief of Yvonne Winifred Kathleen Walker Andrews.


Stanley Howard Knowles: Mr. Speaker, it has been my hope
that, since this job of dealing with this case and others devolves upon parliament, and parliament has not yet found it possible to agree to get cases like this out of parliament to a proper court, we in this house should each do his job. I would hope that others
3744	HOUSE OF
Private Bills-Divorce
besides some of us over in this corner who have been studying these cases might feel it part of their duty to take this evidence and look into these cases and ascertain whether or not some of them should be granted.
Here again there is a child. I find that the woman, who is the petitioner in this case, is in financially difficult circumstances. Indeed, that is the reason for the delay on her part in applying for the divorce. She and her husband have been living apart for a number of years. She first applied to the Senate for divorce back in 1947. It appears that at that time she did not have enough money to pay the necessary fees to proceed with her divorce in the other place, and so the case was laid over.
She and her child stay with her mother. She is making only about $20 a week. I am glad to note that in view of her financial circumstances the Senate reduced by $100 the amount of the fees which they charged her on this occasion. The Senate was also good enough to grant the divorce, at least in so far as the Senate is concerned, in this year of 1951 on the basis of an investigation that took place back in 1946. That is a bit unusual in the other place, but they recognized the poverty of the woman as the reason she had delayed going ahead with her case. Yet, despite the financial difficulties that she faces, despite the fact that she has now to support both herself and her child, here is another case where there is no support for her or her child from the husband and father. The Senate ascertained that information, but of course they were not in a position to do anything about it. Again, I note that the investigation made back in 1946 was by two professional investigators. They are not the same two who acted in the other cases we have considered thus far tonight, but their names do turn up in cases further down on the list.
I regret having to admit that this marriage seems to have been dissolved because of the action of the husband, and we have no option but to agree to the divorce. However, so far as we are concerned I am sorry there is no way in which the husband and father could be made to provide financial support for his wife and child.
Motion agreed to and bill read the second time.



ELIZABETH COCHRANE AITCHISON LALONDE

David Arnold Croll: the second reading of Bill No. 327, for the relief of Elizabeth Cochrane Aitchison Lalonde.


Stanley Howard Knowles: Mr. Speaker, I hope hon. members will note that I have been taking these cases as they come, one by one. I would ask them to note, too, how often I have to comment that there is a child or that there are children for whom no provision has been made by way of support by the father. I forget how many times I have said that in the cases we have dealt with thus far tonight; but it applies again in this case.
This woman has a little girl three years of age. During the hearing in the other place they obtained from the woman the information that there is no support for her or for the child from her husband. At pages 10 and 11 of the evidence I find this:
By the Deputy Chairman:
Q. Did you get support for the child?
A. No.
By Mr. Greenblatt:
Q. He did not give her any money, then?
A. No.
I would point out that this is a case where no detectives or private investigators were called in. It is refreshing to find that, when so many of these cases are handled by private investigators, and there is such a similarity in them. One feels there is a little more authenticity when that is not the case.
In connection with this divorce the woman, the petitioner, obtained the necessary evidence herself on an occasion when she went to the place her husband was staying, in an effort to get some money from him to help her pay the expenses of their child's illness. I cannot help taking a moment to point out to the house what we are called upon to do. We are called upon in this case to decide whether this marriage should be legally dissolved, and we have no power to do anything with respect to this other phase of the matter.
Here is a man who not only provides nothing by way of support for his wife and child when they are well, but who refuses to provide any help when the child is ill. It seems to me this whole business is completely unsatisfactory, and that we should not be dealing with cases of this kind at all. If we are going to deal with them, then I urge we do so with a proper sense of responsibility, that we do it thoroughly, as is done in connection with other bills coming before the house.
It is passing strange that tonight we have thus far called four separate bills dissolving four separate marriages, but thus far it seems that no one else in the house has taken the trouble to read the evidence so as to make up his mind as to whether or not these divorce cases should be accepted. I say in respect of this case that the evidence seems to be conclusive. It was obtained, not by a

detective but by the petitioner herself. She got it, not because she was seeking such evidence but because she called on her husband in an attempt to get money to help out during the time of illness of their child.
On the basis of the evidence I feel we have no option but to give this woman freedom from this man. However, it is too bad nothing can be done about the failure of the man to support his wife or their child.
Motion agreed to and bill read the second time.



VIOLET TAYLOR CAREY

David Arnold Croll: the second reading of Bill No. 328, for the relief of Violet Taylor Carey.
Mr. Stanley Knowles (Winnipeg North
Centre): Mr. Speaker-


An hon. Member:: Again.


Stanley Howard Knowles: I hear a few comments being made. Perhaps the senior member for Halifax (Mr. Dickey) would like to speak to this case.


Mr. Robinson:: Mr. Speaker, as there is other business to come before the house, if I might have unanimous consent I should like to move, seconded by the hon. member for Welland (Mr. McMillan):
That the name of Mr. Knowles be substituted for that of Mr. Croll on the standing committee on miscellaneous private bills.
My reason for offering the motion, Mr. Speaker, is that in these circumstances the committee would then have the benefit of the learning and the undoubted time the hon. member for Winnipeg North Centre has spent on these bills. I feel that it would be much better to have that work done in the standing committee rather than in the House of Commons. I have made my motion, but I realize I must have consent.


Mr. Speaker:: Has the hon. member
unanimous consent?


Some hon. Members:: No.


Mr. Maclnnis:: On a point of order, this is
not the time to make a motion of that kind. There is a time for such motions when routine business is called. Then, I wonder if the hon, member who offers the motion has ascertained from the hon. member for Winnipeg North Centre (Mr. Knowles) whether he is willing to substitute?


William Alfred Robinson: I can assure the hon. member that I have the consent of the other member to retire from the committee, so that the hon. member for Winnipeg North Centre can take his place.
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Private Bills-Divorce


Donald MacInnis: The hon. member who has made the motion may think he is very clever, but he is not clever at all. He is dealing with a serious matter; and if he does not know how to deal with a serious matter he had better not try to be either frivolous or facetious about it.


William Alfred Robinson: On a question of privilege, I assure the hon. member that I was neither frivolous nor facetious. But I do feel very strongly, as I think most hon. members feel, that we have been spending a great deal of the time of the entire house on matters that might be dealt with more expeditiously elsewhere.
As I said on a previous occasion, there are other matters to come before the house in these short hours between eight and nine o'clock on Tuesdays and Fridays. These matters should have the attention of the house, and I feel sure hon. members would want to give more time to them. I assure you, sir, that my motion was made in no spirit of levity, but merely to expedite the proceedings of the house.


Julian Harcourt Ferguson: We have listened to this bickering back and forth. The hon. member for Simcoe East has made a rather good suggestion; but it seems to me that, as a member of the party supporting the government, if he would spend as much time advising the government to stop this repetition and nonsense that goes on here, year in and year out, regarding the heart strings, sorrows and griefs of people in the Dominion of Canada, then we would have a cessation of this nonsense. If the hon. member for Simcoe East would spend some time in trying to get the government to solve this problem and avoid this nonsense that is brought here every year dealing with the sorrows of the people of Canada, he would do a lot to prevent these matters being handled in this manner.


Mr. Speaker:: The motion which has been moved by the hon. member for Simcoe East (Mr. Robinson) can, as the hon. member for Vancouver East (Mr. Maclnnis) has suggested, be put only with the unanimous consent of the house. As there is not unanimous consent, I cannot put the motion.


Stanley Howard Knowles: Mr. Speaker, I believe we are on Bill No. 328?


Mr. Speaker:: Yes, Bill 328.


Stanley Howard Knowles: Although neither the hon. member for Simcoe East (Mr. Robinson) nor I know the two people involved in this case, if they have the right to come to parliament to ask for the passing of this bill then they have the right to expect that their bill will be considered an important piece of legislation. To suggest that we are wasting time on bills because we take two or three or four minutes

Private Bills-Divorce on one bill is I submit altogether lacking in perspective as to the importance of our duty in connection with private bills.
I have only a word or two to say with respect to this case. There is one adopted child in this family whose care the mother is undertaking. There seems to have been, according to the evidence, about three years of misconduct on the part of the husband and there seems no alternative but to approve the bill. But I question whether we are doing our job as responsibly as we should when so many members are not taking the time to give consideration to cases such as this.
Motion agreed to and bill read the second time.



JULIA SAYKALY HAJALY

David Arnold Croll: the second reading of Bill No. 329, for the relief of Julia Saykaly Hajaly.


Stanley Howard Knowles: Mr. Speaker, I was waiting to see if anyone else had read this evidence and cared to speak about this case. I suggest that if hon. members are tired of hearing me speak-


Some hon. Members:: Hear, hear.


Stanley Howard Knowles: I notice there is pretty general support of that proposition. If they are tired of hearing me speak to these divorce cases they can avoid that by studying these cases themselves and bringing their observations to the attention of the house. I submit that that is the way for us to deal with matters of this kind, so long as parliament insists on handling divorce cases, which I hope will not be much longer.
The two people involved in Bill No. 329 have one son five years of age. I want to say that it is to the credit of the Senate committee that in almost every instance, as far as I have read these cases, where there are children involved the Senate committee makes inquiry as to what is happening to them even though they may not be able to do anything about it. I have searched this evidence and to my amazement they do not seem to have asked any questions at all as to how this woman is financially situated or as to whether or not she is able to care for this child.
There is one other comment I want to make on the evidence given in this case. On other occasions when we have been discussing these matters some of my colleagues have been criticized, the hon. member for Saskatoon (Mr. Knight) in particular, for intimating that some of this business is done professionally. On one occasion the hon. member for Saskatoon objected that the name of the co-respondent was not given.
IMr. Knowles.]

What he had in mind was that apparently the co-respondent is the same person in different cases. I am not going to read this evidence but I shall paraphrase it. I gave the undertaking some time ago that I would not put on the pages of Hansard any of the sordid parts of the testimony.
When the investigator in this case was asked whether he had actually seen the woman co-respondent his answer was that he had seen her several times.


Mr. Hunter:: Mr. Speaker, I rise on a
point of order. I believe the hon. member is performing a great service because he is opening up something that is quite important, that is that we have been passing these bills very casually. However, I do not like to see him spending time on matters which perhaps are not within the jurisdiction of this parliament. For instance, it has always been considered that property and civil rights are within the jurisdiction of the provinces and actions for alimony or maintenance and for the custody of children are therefore distinctly within the powers of a province and governed by provincial law.
Similarly, I think it should be pointed out to the hon. member that this parliament has the right to grant a divorce to any person for any cause whatsoever or for no cause. It has been the custom of this parliament to grant divorces only for acts of infidelity, but that does not mean that parliament cannot grant a divorce for any conceivable reason or for no reason whatsoever. When we talk about whether there are children concerned in. an action I suggest, and I suggest it very seriously, that that has nothing to do with the matter. That would have nothing to do with this particular divorce bill. If the Senate committee on divorce decides to go into the question of whether there are children or not, that has nothing to do with the bill that comes forward. I suggest that any evidence as to whether there are children concerned is distinctly out of order.
I suggest also that any criticism or implied criticism as to the casualness with which the Senate committee have dealt with this matter is distinctly out of order because the Senate can grant a divorce on any conceivable grounds, just as this honourable house can.


Stanley Howard Knowles: Speaking to the point of order that has been raised by the hon. member for Parkdale (Mr. Hunter), I wish to say that I agree thoroughly with some of the views he has expressed. I think he is stating the position correctly when he points out that, whatever may be the divorce laws of a province, parliament has it within its power to grant a divorce on any ground whatsoever,

but the hon. member is also correct when he says that in 999 cases out of 1,000 the divorces granted by parliament are on the ground of infidelity.
The hon. member is also correct when he says that we have no authority over property and civil rights and therefore have no power to obligate people, at least in so far as divorce is concerned, to take steps with respect to children.
The point I wish to make now is the same point that I have made on other occasions and with which, I think, Your Honour has agreed. Since we are being called upon in this House of Commons to decide whether Mr. and Mrs. A. shall be divorced, surely we have the right to get information which I feel, or which the hon. member for Parkdale or anyone else feels, is pertinent to the question and which should be known before any one of us makes up his mind whether to grant a divorce. It is on that basis that I have stuck to the matters referring to the individual cases that come before us.
There was a time when on second reading of divorce bills some hon. members debated the broad principle of divorce but Your Honour has ruled that when we are on these divorce bills we must stick to the particular case before us. I accept your ruling. We are now dealing with the question of whether or not Bill No. 329 should pass. I think before Bill No. 329 passes we have the right to consider anything relating to Bill No. 329 which any one of us feels is pertinent to the question as to whether or not this divorce should be granted.
As I was pointing out when the hon. member for Parkdale intervened, one fact that appears to be evident in this case is that the detective admitted that he had seen the face of the co-respondent on several different occasions. I shall say no more about this case. That carries with it an implication that I think is very clear, and it raises a question as to whether we should not look into the whole business of the way that we grant these divorces.
Motion agreed to and bill read the second time.



DORIS AUCLAIR GINGRAS

David Arnold Croll: the second reading of Bill No. 330, for the relief of Doris Auclair Gingras.


Mr. Speaker:: Order. The hon. member for Parkdale (Mr. Hunter) raised a point of order, and the point of order is without doubt well taken. It is generally agreed that this house has no control over the question of property and civil rights, and therefore has
Private Bills-Divorce
no power to make any decree as to whether or not children should be supported. I doubt, however, if I can go so far as to prevent an hon. member from referring in the evidence to the fact that there are or are not children. On second reading of a bill I think an hon. member can refer to the circumstances surrounding the case. I do not think an hon. member should argue that because there are or are not children the divorce should or should not be granted, but I could not disallow a reference to the fact as to whether there are children.
May I also point out that in accepting the principle of a private bill the house does not, as in a public bill, accept the principle unconditionally. The principle of a private bill is accepted subject to the facts being proved before the committee to which the bill is referred. In that way there is a distinct difference between the approval of the principle of a private bill and the approval of the principle of a public bill.


Stanley Howard Knowles: Mr. Speaker, there are two or three points with respect to Bill No. 330 that I should like to draw to the attention of hon. members. I am prepared to agree to this divorce although I am unhappy about it. I imagine, however, there are some hon. members who, if they had read the evidence in this case, would say that we should not grant this divorce. I point out that the husband and wife involved in Bill No. 330 lived together until as recently as February of this year. I point out also that the two children of the family, boys of fourteen and eight years of age, are in a boarding school, and that the father is supporting them. Therefore there is no problem so far as support of the children is concerned in this case, although it is a case where a home is being broken up, and I for one cannot help but take note of that. Even though adultery may be proved, I cannot help but take note of the fact that not only are we consenting to the breaking up of the married life of two people but we are depriving these two boys of the chance for a normal home. There is one other matter about this case that I should like hon. members to know. At page 12 of the evidence, when one of the detectives is appearing before the Senate committee, he gives his evidence as to how he got into a certain room in order to pick up the necessary evidence. He said that the man in the case got a bit excited and the detective tried to calm him down by using these words:
Don't get excited, or I wilt bring your wife, who is downstairs, up.
Then the detective goes on to say: "We were only bluffing; she was not downstairs".

Private Bills
That is not the first time I have run across that kind of evidence in these cases. Not being a lawyer and not knowing precisely how these things are done, it makes me wonder what is the standard for the credibility of a witness when he admits on the witness stand that in order to get his evidence he said things that were not true.
Motion agreed to and bill read the second time.



GEORGES PAQUIN

David Arnold Croll: the second reading of Bill No. 331, for the relief of Georges Paquin.


Stanley Howard Knowles: Mr. Speaker, I will take only a minute on this case although it is one which I wish the hon. member for Inverness-Rich-mond (Mr. Carroll), or some other member, had taken the time to read and study. It is a contested case and the man is the petitioner. They have seven children. Counsel for the wife, the respondent, at page 31 of the evidence was asked the following question:


Hon.   Mr. Horner@: Do you think there is any
hope of bringing this couple back together, to live as man and wife in peace?
The answer of counsel was: "I think so." As I say, it is a contested case. I think perhaps I will say no more except to express the hope that when this case is before the standing committee on miscellaneous private bills particular attention will be given to it.
Motion agreed to and bill read the second time.



MARION AGNES KELSCH CLEGHORN

David Arnold Croll: the second reading of Bill No. 332, for the relief of Marion Agnes Kelsch Cleghorn.


Stanley Howard Knowles: Mr. Speaker, I should like to ask that Bill No. 332 stand. I do so for two reasons. The first is that I happen to know it is being contested. The second is that the evidence in this case has not yet reached us. Therefore I would ask that it stand.


Some hon. Members:: No.


Stanley Howard Knowles: Yes.


Mr. Speaker:: If the evidence has not been distributed I do not see how we can proceed with the bill. Bill No. 332 will stand.



BAPTIST UNION OF WESTERN CANADA

Mr. F. E. Lennard (for Mr. Diefenbaker) moved: the second reading of Bill No. 336, to incorporate the Baptist Union of Western Canada.


Some hon. Members:: Explain.
(Mr. Knowles.]


Frank Exton Lennard: Mr. Speaker, Bill No. 336,
an act to incorporate the Baptist Union of Western Canada, is in the same form as other bills of a similar nature that have been presented to this house in the past. So far as the terms are concerned, they are the same as for all incorporations of church organizations, and all of them have been in previous incorporations. The United Church was incorporated, the Pentecostal Evangelical organization was incorporated, and many others are in the same position. The petition was filed because the Baptist Union of Western Canada at present operates under four separate charters in the western provinces. These are referred to in section 1 of the bill, three of them being by special act and one being under a limited licence.
It has been felt for some time by the officials of the union that it would be easier to -carry on their business if it could be done under one act applicable to the provinces where the work of the union is being carried on. In addition, the union has now extended its work into the Yukon and the Northwest Territories. It is felt that, by having one incorporation and having the head office in Edmonton, they can carry on their work to far better advantage. I recommend the bill to the house.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on- miscellaneous private bills.


[Stage Direction]
Bill No. 337, to incorporate the Ukrainian Catholic Episcopal Corporation of Saskatchewan.-Mr. Knight.

David Arnold Croll: the second reading of Bill No. 339, for the relief of Marie Laure Jacqueline Patenaude Racine.


Stanley Howard Knowles: Mr. Speaker, I was hesitating again for a moment, hoping someone else had decided to read these cases.


An hon. Member:: Not a chance.


Stanley Howard Knowles: I hear an hon. member say "not a chance" and a while ago hon. members opposite wanted us to go ahead with a case in which we had not even received the evidence. I submit we are not doing a job when we do it that way. In this case there are two children, aged 15 and 14. They are in the care of the mother, who is the petitioner. There seems to be no option but to agree to the divorce, but it does seem most unfortunate to have to break up a home, particularly with children of that age.

Motion agreed to and bill read the second time.



MURIEL EDNA GLASS FRYER

David Arnold Croll: the second reading of Bill No. 340, for the relief of Muriel Edna Glass Fryer.


Stanley Howard Knowles: I am able to point out to the house, Mr. Speaker, that this couple had no children-. I can also say this is another case in which no detectives were employed; the evidence was obtained by the petitioner and her brother.
Motion agreed to and bill read the second time.



EMMA LARONDE BELL

David Arnold Croll: the second reading of Bill No. 341, for the relief of Emma Laronde Bell, sometimes known as Emma DeLaronde Bell.


Stanley Howard Knowles: This case seems most unfortunate. This couple were married 28 years ago. Their son is now 25 years of age, so we do not have to concern ourselves about children here. However, though they were married 28 years ago, the husband has been living apart from his wife, and indeed living with another woman, for the past 17 years. Again I point out that no detectives were engaged in this case, that the evidence as to the man living with this other woman was supplied by a man and wife who lived near them, more particularly at a summer resort. It is an unhappy situation, but apparently the adultery was established and since it is our practice to grant divorces on that basis there seems nothing to do but to agree to this bill.
Motion agreed to and bill read the second time.



BIRUTE ELENA VAITKUNAITE AKSTINAS

David Arnold Croll: the second reading of Bill No. 342, for the relief of Birute Elena Vaitkunaite Akstinas.


Stanley Howard Knowles: I just point out, Mr. Speaker, that we are back again to the same detectives who appeared in two or three of the other cases we have dealt with tonight, and who provided the evidence in this case. I also point out that there is one child.
Motion agreed to and bill read the second time.



GEORGE KEITH HENDERSON

David Arnold Croll: the second reading of Bill No. 343, for the relief of George Keith Henderson.
Border Pipeline Corporation


Stanley Howard Knowles: I ask that this motion stand for one of the reasons I gave in the case of Bill No. 332. The evidence in connection with this bill has not yet come to our desks.


Mr. Speaker:: Stands.



BORDER PIPELINE CORPORATION

[Stage Direction]
The house resumed from Friday, May 25, consideration of the motion of Mr. Robinson, for the second reading of Bill No. 118, to incorporate Border Pipeline Corporation, and the proposed amendment thereto of Mr. Herridge.
Owen Lewis Jones: When this bill was under consideration previously I moved the adjournment of the debate. At that time I spoke in favour of the amendment, and I am going to repeat my reason for doing so. We in British Columbia, and by that I mean practically 95 per -cent of the people of that province, have taken the stand that these pipe lines should pass through Canada. This particular company has not seen fit to incorporate in the bill a clause to that effect, and through the amendment we are seeking to have that provision inserted. I am sure if the sponsor of the bill would agree to incorporate a clause under which this pipe line would serve Canadian cities first, any objection on my part would be withdrawn immediately.
I pointed out also that we are now faced with a greater need than ever before to consider the conservation of our natural resources. Already in the United States, through lack of any sound conservation policy, they find themselves running out of many raw materials for which they are now looking to Canada. Unless we have a policy, and unless we check what is taking place, we also will find ourselves in the unhappy position the United States is in, having to -come to Canada for pulpwood and other raw materials. So I advocate that as part of that conservation policy the government should step in right now and support the conservation of our gas and oil in Alberta. I feel that this would pay dividends, for the amount paid for our raw materials, whether they be ore, timber, oil or gas, by our neighbour to the south is very small compared to the value of those materials if processed in Canada. In addition, this cheap power we are going to provide the United States will assist our greatest competitor to become even more competitive, which naturally will react unfavourably upon our own industry. I strongly feel that we should process our own raw materials instead of exporting them at nominal prices. Already we have a top-heavy balance of trade in favour of the United

Border Pipeline Corporation States, and that balance will be further intensified if we do not follow a policy of conservation.
I am not opposed to the United States obtaining some of our surplus gas, but I am opposed to that country having the first chance to use that gas. If we should run short, or if the expected amount should not be available, then Vancouver and other Canadian points would get none at all. There is no suggestion by those sponsoring this bill that they intend to serve any other Canadian point but Vancouver. As far as British Columbia is concerned Vancouver is just one point. We have a vast interior thirsting for this power and just as anxious to have it as Vancouver. I mention Vancouver because under this charter it is the only point in Canada this company intends to serve. I have already indicated the vast resources of the hinterland, the type of people living there, the climate we enjoy, and the new era that will dawn if we are given this power to develop our resources. I do not intend to stand idly by and watch this particular resource be sabotaged from under our feet. At least we can register our protest.
The main argument advanced by these companies for going through the United States is the lack of markets on the Canadian route. On checking a map of the route proposed in this case I find that in going through the United States it would serve only Spokane before reaching the Pacific coast. Calgary could be served by a short line at any time, and I believe a short pipe line serving Calgary would be a very profitable undertaking.


William Alfred Robinson: I must admit that I am not very familiar with the geography of British Columbia, but am I not correct in saying that this pipe line will pass through the Kootenay district, one of the greatest industrial areas of the province?


Owen Lewis Jones: You should know; you are sponsoring the bill. My answer would be no.


William Alfred Robinson: Is not the Kootenay district a great industrial area?


Owen Lewis Jones: No, Kingsgate. I am referring to the Okanagan valley, the Fraser valley and Kamloops, all those towns in the interior. This line will not go through the Trail area. It will go close to it, and probably will be piped in; I do not know. It is intended to go through Kingsgate, which takes it directly to Spokane.
The rail transportation costs for oil, for instance, from central Alberta to Calgary, a matter of 200 miles, is 65 to 68 cents per
'Mr. Jones.]
barrel. The Interprovincial Pipe Line carrying oil 1,150 miles to the great lakes carries it for 56 cents per barrel. I claim, therefore, that the loss of the Spokane consumers to the pipe-line company would be recovered by the gross of the British Columbia interior towns, particularly the valleys I mentioned and the communities that occupy those valleys. Furthermore, the towns of Nelson and Trail, and this big consumer to whom I referred, the Consolidated Smelters, could be served if the pipe line followed the route through southern British Columbia instead of going through the United States.
It seems to me we are entirely overlooking the potential value of the pipe line as a developing influence in our country's economy. We have stressed the importance of the money to be made by the sale of gas and oil, and not the wealth that can be made by utilizing that gas and oil in our own country to increase our own production. The government has been asking for more production, but will not channel the power to sources that could provide this extra production. I believe that the pipe line should be built, owned and operated by the government, but unfortunately that point has been settled. I believe it should be run as the Canadian National is run, and by the same company. It could have been added as another form of transportation to the already operating transportation system. Whether it is a railway, the T.C.A. or a pipe line should make no difference.
Since a pipe line is the only feasible means of transporting gas or oil to the Pacific coast, and possibly only one pipe line will be built, it follows that the company building the line will have a complete monopoly. This means that they will control not only the line but also the price to be paid by the consumer for the product. In the United States, where a similar condition existed, they have passed a law to remedy this condition. I should like to quote from the work of Mr. Sharfman, the interstate commerce commission, 1931, part II, at page 59:
"The acquisition of a practical pipe-line monopoly by the Standard Oil Company, together with the unfair methods pursued by that corporation in order to maintain its monopolistic position, led to the inclusion of pipe lines among the carriers subject to the commission's jurisdiction. Although the commission was clothed with authority, in general terms, over any additional transportation agency, the extension of jurisdiction was largely aimed against the abuses of monopolistic power in the petroleum industry rather than against the free operation of pipe lines as such. By 1906 the commission possessed adequate power to remove the flagrant railroad discriminations of which the Standard Oil Company had been one of the most notorious beneficiaries: the added control over pipe lines was designed to eliminate another potent

source of abuse which sprang from that company's dominant ownership of essential transportation facilities."
By the Natural Gas Act, 1938, it is provided that all rates and charges made, demanded or received by any natural gas company for the transportation or sale of natural gas, must be just and reasonable, and any rate which is not just and1 reasonable is declared to be unlawful (section 4 (a)). Discrimination is expressly prohibited, it being provided that no natural gas company may "make or grant any undue preference or advantage to any person or subject any person to any undue prejudice or disadvantage." Unreasonable differences in rates, charges, services, facilities, and in other respects between localities or classes of services are prohibited (section 4 (b)). The act provides for the fixing of rates by the federal power commission according to fair and equitable principles (section 5 (a)). It may act upon its own motion, or upon application of any interested persons, including state commissions which may be of opinion that rates or conditions in particular instances are discriminatory or unfair. By this machinery, gas pipe lines falling within the term "interstate commerce" are controllable.
At present there is no corresponding act in operation in Canada. I would urge that the government, for the protection of consumers, study this act with a view to incorporating it in our own laws. Naturally, I am concerned over the fact one company is going to obtain a charter to build the pipe line, although there are many applicants at present. I would suggest that the government should give consideration now to passing laws to protect the consuming public against any tendency on the part of such a company to exercise the monopoly it would have to the detriment of the people of my province. Naturally, the price would be based on the principle of what the market would bear. I consider this company, like the others who have applied for a charter, has evinced a desire for quick profit, and has put that above the interests of the Canadian people. I make no apology, therefore, when I place the interests of my own riding and; my own province before the welfare of any particular company. I not only do so, but I would ask the members on the other side who are shouting, the members from the other provinces, to see the point the members from British Columbia are trying to place before you, that we are trying to build our own province now before it is too late. In a year's time it will be too late. We shall see the state of Washington going ahead and will realize what could have happened in British Columbia.
When I speak on this bill I want you to understand that I have nothing against the company, nothing against the directors, and nothing against the sponsor of the bill. I merely object to a bill being passed by a vast majority of people who do not know the conditions, and which would react to the detriment of the people I am representing.
Excise Tax Act
On motion of Mr. Jones the debate was adjourned.


Mr. Speaker:: It being nine o'clock, the house will resume the business which was interrupted at six o'clock.



EXCISE TAX ACT

[Stage Direction]
The house resumed consideration in committee of Bill No. 294, to amend the Excise Tax Act-Mr. Abbott-Mr. Beaudoin in the chair.
On paragraph 14.
Stanley Howard Knowles: Mr. Chairman, at six o'clock I asked that we defer discussion of this paragraph 14. My question really relates to the wording of the paragraph. I should like to know whether the word "except" in line two governs all the rest of the paragraph? It reads:
Clocks and watches adapted to household or personal use, except railway men's watches, and those specially designed1 for the1 use of the blind, and alarm clocks where the sale price by the Canadian manufacturer or the duty-paid value of those imported does not exceed ten dollars.
Now, are alarm clocks, which after all are no luxury, subject to the 25 per cent tax or are they excepted from it?


James Sinclair: No; if their selling price is
less than $10. If it is more than $10 it is subject. The ordinary cheap alarm clock is not subject to this excise tax. "Except" applies to all exceptions. It reads:
Except railway men's watches, and those specially designed for the use of the blind, and alarm clocks where the sale price by the Canadian manufacturer or the duty paid value of those imported does not exceed $10.


Stanley Howard Knowles: That is the clear intention?


James Sinclair: It is not only the intention,
it is the practice. The only change here is changing from 15 per cent to 25 per cent. We are not making any change in the body of the description.


John Lambert Gibson: Are railwaymen's watches
subject to sales tax?


James Sinclair: Yes.


Donald Methuen Fleming: This raises precisely the same question we had in respect to earlier paragraphs in the schedule, and the issue arises here all the more clearly because of the exception that is made of alarm clocks costing less than $10 on the theory, presumably, that they are not luxuries, and that they are necessities so long as they do not run over $10. What about the cheaper forms of watches? Surely to goodness the same reasoning should apply to them. If there are grounds for excepting alarm clocks which are priced not over $10, then certainly by the

Excise Tax Act
same kind of reasoning there ought to be an exception made of clocks and watches which are not expensive. I am waiting, Mr. Chairman, to hear some explanation of this discriminatory tax provision. We have had numerous examples already today, but it seems to me this one is presented by the language of paragraph 14 (a) in very acute form.


James Sinclair: This exemption goes back
actually to war taxation when we put on a 25 per cent retail tax on exactly the same items, and the cry was raised in the house and across the country: You are actually impeding defence in that you tax the cheap alarm clock that has got the workers up at three in the morning or at seven in the morning or at eleven at night, on the graveyard shift, and the women workers too. Quite a plea was made in this house, and quite a plea was made outside that cheap alarm clocks which were so essential to rouse the defence workers were an essential part of our defence industry. Because of that an exception was made, which again brings home to me the difficulty of making any exceptions in these tax rules, because the moment you make an exception, then the opposition beats you over the head and says everything else is discriminatory because you have made this exception. This exception dates back to the day when we had a 25 per cent retail tax, and actually dates back to war itself.
The body of the paragraph has been carried along with first of all the 25 per cent retail tax which then dropped down to the 10 per cent excise tax and now lifted to 25 per cent excise tax.


Donald Methuen Fleming: As far as I am concerned, the parliamentary assistant does not need to defend the exemption in favour of alarm clocks not over $10 in value. But what we have not heard from the parliamentary assistant is a defence of a tax on clocks and watches of the less expensive variety. What justification can there be for imposing a tax like this on all clocks and watches of lower value, and bringing that tax up from 15 per cent to 25 per cent, to make matters worse?


Julian Harcourt Ferguson: The people of the country
will be very glad to know that by beating the government on the head the opposition has put some reason in it. On one point at least they are being reasonable on the tax situation after being constantly beaten on the head by the opposition.


Mr. Hodgson:: I think the minister should
reconsider the imposition of a tax on cheap watches because today many labouring men nv/rr Fleming.]
cannot afford an expensive watch. In addition to that, these cheap watches will stand more rough usage and wear than the expensive watch.


Gordon Knapman Fraser: In the part of the paragraph
which reads, "or the duty paid value of those imported does not exceed $10", does that duty paid value include the import oost of the watch plus the duty?


James Sinclair: Yes, that is right.


Gordon Knapman Fraser: It would be plus the duty.


James Sinclair: Yes.


Gordon Knapman Fraser: That is only where it would be paid by the Canadian manufacturer?


James Sinclair: Yes, that is right.


James MacKerras Macdonnell: The hon. member for Queens points out that what is going to happen is that everybody will be forced to carry an alarm clock. I really feel that the parliamentary assistant must give us some other reason than what was done during the war. After all, are we going to say that everything that was done during the war has to be continued for all eternity? Surely some reasonableness can enter even into questions of taxation. We have not had any yet on this particular item.


James Sinclair: The obvious way to make it reasonable would be to put these alarm clocks back under the same item. Then everybody would be covered.


Some hon. Members:: No.


James Sinclair: As I recall it, the hon. member for Peterborough West raised this very question. The moment we give an exception such as this, then everybody else comes screaming that this is unfair to the other groups, which of course shows one reason why perhaps the department should be very reluctant to give these special concessions. But once again the change here is not a change in the body of the description that is here. The only change in this section is to change the tax from 10 per cent to 25 per cent.


Julian Harcourt Ferguson: If this government had done things during the war that it should have done it would not be necessary to do them now. Here it is six years after the war and they are doing things that they should have done during the war.


Gordon Knapman Fraser: When we were talking about alarm clocks some few years ago, I pointed out to the government that it was to their advantage, to the government's advantage, to make alarm clocks free of this excise tax because the workingman had to have an alarm clock to wake him up in the morning

so that he could earn his wage to pay income tax to the government to make the wheels go round. It was a concession, but it was to the government's advantage to exempt alarm clocks.


Julian Harcourt Ferguson: It takes alarm clocks to wake this government up.


Gordon Knapman Fraser: It would take a cannon to do that.


Donald Methuen Fleming: I think there is more than passing significance in the last remark made by the parliamentary assistant. He says that "the moment we give an exemption then somebody else wants another exemption", which he concludes is the reason for not giving exemptions. I must say, Mr. Chairman, that these exemptions are not given by the government. Such exemptions as exist in the law of this land are such as are written by parliament. Surely parliament in studying what shall be taxed and what shall be exempt is entitled to proceed, reasonably. When a proposal of this kind is made, surely the House of Commons is entitled to have some explanation as to why this particular commodity, namely, clocks and watches-and we are speaking of those of lower value- should be taxed.
All that we have had so far by way of any attempt at justifying the tax of 25 per cent on clocks and watches of lower values, so far as the parliamentary assistant is concerned, is just this, that an exemption was made in favour of alarm clocks during the war, and the general rule should be that all clocks and watches should be taxed. I say, Mr. Chairman, that all clocks and watches should not be taxed.
If the Minister of Finance will make out a case for the need of increased revenue, anything that can be classed as a luxury will, in the view of practically every member in this House of Commons, be a proper subject for the application of an excise tax. But, Mr. Chairman, that is no excuse whatever either for cohtinuing the 15 per cent tax or increasing to 25 per cent an excise tax on clocks and watches when we are having regard to those of an inexpensive nature which are used by people who cannot afford more expensive watches. What the minister in effect is doing at this time, without even attempting to take the trouble to justify it before the house, is to soak those who must purchase these inexpensive watches with a 25 per cent tax. We know that it is a tax at the source, and by the time the article reaches the consumer the tax will be something like 50 per cent that he will be paying.


Louis-René Beaudoin: Shall the paragraph carry?
Excise Tax Act


Donald Methuen Fleming: No; surely we are entitled
to a reply.


Louis-René Beaudoin: Hon. members in
favour of the paragraph will say yea.


Some hon. Members:: Yea.


James MacKerras Macdonnell: It does not
carry, Mr. Chairman. I am still interested in it, because I say we are entitled to something more by way of explanation. I can understand that railwaymen's watches are excepted because, after all, the watch is a necessary part of a railwayman's equipment, just as alarm clocks are a necessary part of one's equipment to get up in the morning- although I am not so confident about the last item.
There must be other people in large numbers to whom a cheap watch is as important for their own personal use, as is the watch of the railwayman. I think we are left here without a proper explanation, except that it was done in wartime. Well, I could make a list of things which were done in wartime, which I am sure the minister and his assistant would back away from now.


Douglas Charles Abbott: The explanation has been
given a great many times, but I suppose there is no harm in my repeating it. In this schedule of the Excise Tax Act which we are now considering are grouped a number of items which are not necessarily luxuries, but which are less essential. The people who purchase those articles are taxed. In the past they have been taxed at 15 per cent, and they will now be taxed at 25 per cent.
As I have said time and again, the problem is to spread this burden among the people of Canada as fairly and equitably as we can, because they are the people who must pay it. One may differ as to whether this accomplishes our purpose. But this particular group of articles has been in the Excise Tax Act for a number of years. This year, as I explained in my budget speech, we decided to increase the rate from 15 per cent to 25 per cent. I can give no other explanation; it has been given time and again.


Louis-René Beaudoin: Shall the paragraph carry?


Donald Methuen Fleming: No.


Louis-René Beaudoin: Those in favour?


Some hon. Members:: Yea.


Louis-René Beaudoin: Those opposed?


Some hon. Members:: Nay.


Louis-René Beaudoin: In my opinion the
yeas have it, and I declare the paragraph carried.
375.1

Excise Tax Act


Donald Methuen Fleming: On division.
Paragraph agreed to on division.
Paragraph 15 agreed to.
On paragraph 16.


Donald Methuen Fleming: Mr. Chairman, I wish to
say again on this item that while I am sure hon. members are glad to see this reduction from 30 per .cent to 15 per cent, the reduction does not go far enough. The minister gave reasons in his budget speech for reducing from 30 to 15 per cent this tax on candy, chocolate, chewing gum and confectionery. He was obliged to point out at that time that by singling out this particular industry for a 30 per cent tax, which was imposed last September, great harm had been done the industry. The tax had been discriminatory. The reasons which have led the minister to propose a reduction from 30 per cent to 15 per cent in the tax, both in logic and in common sense must carry him inevitably to the conclusion that that tax ought to be done away with altogether.
The experiences in that industry have been dwelt upon in the house. I gave figures in an earlier debate as to the cost of production it was facing, even at the time the minister chose it for that heavy and discriminatory tax last September. The result has been a very serious loss of business in that industry in the interval.
I hope no hon. member will leap to the conclusion that by reducing this tax from 30 per cent to 15 per cent the minister will put the industry in a satisfactory condition, or restore the condition it was in before the 30 per cent tax was imposed last September. The fact of the matter is that production costs have continued to rise in that interval and, with respect to almost all the ingredients of the articles set out in paragraph 16 of schedule I, the cost of production has been rising, and represents a serious problem to those engaged in the industry, whether employer or employee. Production has fallen, and employment has fallen drastically in the industry.
I again urge, as I did at the resolution stage, that, having seen the error he committed in September last when he imposed the tax, the minister should go the full way to repair so far as he can the damage he did at that time to the industry, and eliminate this discriminatory tax entirely.


Louis-René Beaudoin: Shall paragraph 16 carry?


Donald Methuen Fleming: On division.
Paragraph agreed to on division.
[The Deputy Chairman1
Schedule I agreed to.
Section 10 agreed to.
On section 11-Schedule 11 repealed and re-enacted.


Louis-René Beaudoin: Shall we consider schedule II along with section 11?


Some hon. Members:: Carried.
Schedule II agreed to.
Section 11 agreed to.
On section 12-Schedule III amended.


James Sinclair: I have a minor amendment to offer to section 12, which varies exemptions so far as the sales tax is concerned.


Mr. Fournier (Hull):: I move:
That schedule III be amended by adding thereto under the heading "Miscellaneous" the following:
"Articles and materials purchased or imported by a government of a country designated by the governor in council under Customs Tariff item 708, or purchased or imported by a Canadian government agency on behalf of such a government, for the construction, maintenance or operation of military or defence establishments in Canada and not intended for resale, gift or other disposition except as may be authorized by the Minister of National Revenue."


James Sinclair: It will be recalled that in the Customs Tariff bill there was provision for British commonwealth and designated countries under the North Atlantic treaty to import goods for their own military uses free from customs tariff, provided of course that the same concession was extended to Canadian goods going to those countries. This is a parallel exemption, in so far as the sales tax is concerned. To use an example, if an American base in Newfoundland were building, we will say, a radar station, then either the material they bring in themselves for that construction or the material brought by a Canadian agency for them would be exempt from sales tax, as it is now exempt from customs tariff.


James MacKerras Macdonnell: The controlling words in the amendment are these:
That schedule III be amended by adding thereto under the heading "Miscellaneous" the following-
And section 12 reads:
Schedule III to the said act, as enacted by section 14 of chapter 50 of the statutes of 1947-48-
And so on. We have the first schedule and the second schedule in the copy of the bill I have, but there is no third schedule.


Douglas Charles Abbott: We did not reprint the third schedule. It was not necessary, because the amendments are very simple.


James MacKerras Macdonnell: As I see it,
without having before us the reprint of schedule III it is not complete. Will the

parliamentary assistant read schedule III as it will be with the amendment, because I have not the third schedule before me.


James Sinclair: It is a very long schedule giving a list of goods exempt from the sales tax. All goods which are not mentioned in schedule III are subject to the sales tax. We have various sections in schedule III. Military equipment comes within this "miscellaneous" category, for instance.


Stanley Howard Knowles: Is not the draft amendment to be looked at more closely? I appreciate what has been done, namely that schedule III has not been reprinted in the bill. But section 12 merely indicates the amendment it was intended originally to make to schedule III. However, the amendment now moved does not say where these words are to be inserted in section 12, which is now before us. It seems to me it has not been hooked up properly.


James Sinclair: It is shown on page 40 of the Excise Tax Act under the heading "Miscellaneous".


Douglas Charles Abbott: It says that in the amendment.


James Sinclair: I have the act here.


Douglas Charles Abbott: I think it will be made clear if the chairman reads the amendment.


Stanley Howard Knowles: Should not there be added to clause 12 which is now before us something to this effect, "and also by adding thereto under the heading of 'miscellaneous' "? The draft as presented to us does not seem clear.


Douglas Charles Abbott: The effect of the amendment will be to include it under the heading "miscellaneous". Perhaps that word should be added.


James MacKerras Macdonnell: I do not want to be too persistent, but I still feel that there is a gap in the wording. Section 10 reads:
Schedule I to the said act, as enacted by section 4 of chapter 8 of the statutes 1950-51, is repealed and the first schedule to this act is substituted therefor.
When we turn to the first schedule we find there set out intelligently a list of articles. Then section 12 reads:
Schedule III to the said act, as enacted by section fourteen of chapter fifty of the statutes of 1947-48, is amended by adding thereto, immediately under the heading "Religious, charitable, health, etc.," the following words:
"Adrenocorticotrophin (ACTH); Cortisone;"


James Sinclair: In the act we have the heading, "Religious, charitable, health, etc.," and then 'on the next page we have another heading, "Miscellaneous". The exemptions fall into groups and this new group comes under miscellaneous.
Excise Tax Act


Louis-René Beaudoin: Perhaps I should read the section as it will read if the amendment is carried, which will be as follows:
Schedule HI to the said act, as enacted by section fourteen of chapter fifty of the statutes of 1947-48, is amended by adding thereto, immediately under the heading "Religious, charitable, health, etc.," the following words:
"Adrenocorticotrophin (ACTH); Cortisone;" and by adding under the heading "Miscellaneous" the following:
"Articles and materials purchased or imported by a government of a country designated by the governor in council under Customs Tariff item 708, etc.-


Stanley Howard Knowles: If the words "and by adding under the heading 'miscellaneous' the following" appear in the section as amended, then I think the job is done.


James Sinclair: That is the amendment moved by the committee.


Louis-René Beaudoin: Let us consider that that is the amendment moved by the Minister of Public Works. It is not on the copies that have been distributed, but I think it is merely a matter of arranging the words. The intention is as I have indicated.


Stanley Howard Knowles: The way you have read it it is all right.


[Stage Direction]
Amendment agreed to.
Donald Methuen Fleming: Mr. Chairman, I should like to make a brief observation in connection with the addition of ACTH and cortisone to the list of drugs exempted from the sales tax under schedule III to the Excise Tax Act. At the present time only one comparable commodity has been exempted, namely, insulin. Radium is also exempted, and it is now proposed to exempt ACTH and cortisone.
Is the minister prepared to give the house some assurance that consideration will be given to extending the list of drugs so that exemptions may apply to other drugs used to relieve chronic sufferers from various diseases? I know the minister has had representations made to him. I and other hon. members made reference during the debate on the budget resolutions to prostigmine which is prescribed for those who have the misfortune to suffer from myasthenia gravis. There are other drugs to which reference could also be made.
The minister has taken a step which I think will commend itself to everyone, but I submit that he should give serious consideration to extending this list of exemptions to include other expensive drugs that are in common use by chronic sufferers from serious diseases.


Douglas Charles Abbott: If my memory serves me rightly, I think I gave that assurance several times. I have no doubt that this list will be added to as circumstances justify.

Excise Tax Act


Major James William Coldwell: I am glad to hear the minister say that again. He is quite right; he did say it the other evening. Radium could hardly be classified as a drug, but the minister is now proposing to add ACTH and cortisone to the drugs being exempted. But there are other drugs that are now well established as being useful to the medical profession in the treatment of chronic diseases. There are certain drugs that are found effective in giving some relief from multiple sclerosis and there are other drugs also effective in the treatment of other chronic diseases, such as the one mentioned by the hon. member for Eglinton.
Last night we heard a plea from the hon. member for Peace River on behalf of vitamin E. I do not profess to know anything about medicine or to be an authority on drugs, but 1 do hope that both the minister and the Department of National Health and Welfare will look carefully into this matter. Perhaps in another year they will be prepared to give consideration to this drug which many people believe to be most important.
I know of cases where the drug has been prescribed and has seemed to do a great deal of good. Since the hon. member for Peace River spoke yesterday I have looked through some correspondence I had earlier this year and I find that if the statements made by the physicians in London, the Drs. Shute, are anywhere near the facts it would seem that consideration should be given to adding this drug to the list. I have met these doctors myself and I formed a very high opinion of them. I believe that on the basis of the evidence produced the other night by the hon. member for Peace River this drug deserves more than passing consideration.
We know that at times the medical profession has been slow to use new discoveries and we know that at times a discussion of . the kind that took place last night in this house has been most useful indeed. Similar discussions have been useful in debunking something that was spurious, and at other times have been useful in bringing certain things to public attention and obtaining recognition therefor.
From personal conversation which I have had with people who have been prescribed this drug it would appear that something like 1,500 doctors in this country who dispense their own medicine, who do not write prescriptions for drug stores, are buying vitamin E and supplying it occasionally. When a high percentage of the dispensing medical men use a drug it would seem to indicate its importance. But I rose primarily to say to the minister that I am glad that the

list has been extended to this extent, and I am taking him at his word that in another year he hopes, as we hope, that other drugs will be added to the list to relieve suffering people of this country.


John Horne Blackmore: The hon, member for Peace River was unavoidably detained tonight. Otherwise he had intended to be here to ask that vitamin E be added to the list of tax exempt commodities. I should like to present that plea in his stead.


Douglas Charles Abbott: I think I mentioned earlier that additional drugs would be given continuing consideration, but we felt this was as far as we could go this year.
Section 12 as amended agreed to.
On section 13-Coming into force.


James Sinclair: Earlier this afternoon when we were discussing section 7 of the bill we indicated that we would move an amendment to section 7 to bring it in line with the amendment made in the house earlier to the Customs Act. Therefore the Minister of Public Works will move that the following words be added to section 13:	.
Provided that subsection 4 of section 115 as enacted by this act-
If you turn back to page 3 you will find it there.
-shall come into force on December 1, 1951.
That is six months hence.


Alphonse Fournier: I so move.


Stanley Howard Knowles: May I ask again whether the wording should not be "section 115 as enacted by section 7 of this act"? I think the phrase "as enacted by section 7 of this act" should be included in that wording.


James Sinclair: That is what we had this afternoon, and the hon. member for Eglinton pointed out that actually the section which we were enacting was a new section. We had section 2 before but now we have 3 and 4, which are new sections. They are being enacted in this act so that the matter of specifying section 7 of this bill would be redundant.


Donald Methuen Fleming: That is not the point raised this afternoon. It would be quite proper to refer in the amendment to section 115, subsection 4, as being enacted by section 7 of this act. The point I raised this afternoon in taking objection to the form of the proposed amendment was that it referred to section 7, subsection 4, of this bill. There is no- such thing as section 7, subsection 4, of this bill. Section 7 has no subsections to it at all.


Douglas Charles Abbott: I think that is perfectly all right, Mr. Chairman. The amendment can read:
Provided that subsection 4 of section 115 as enacted by this act shall come into force on December 1, 1951.


Stanley Howard Knowles: As enacted by section 7 of this act.


Douglas Charles Abbott: "As enacted by section 7 of this act". I am sure the Clerk will have it in regular form by the time it appears in Votes and Proceedings.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Title agreed to.
Bill reported.
Mr. Speaker:: When shall this bill be read a third time?


Douglas Charles Abbott: Now, by leave.


Donald Methuen Fleming: Next sitting.


Mr. Speaker:: Next sitting of the house.



INCOME TAX ACT

Douglas Charles Abbott: the second reading of Bill No. 296, to amend the Income Tax Act.


James MacKerras Macdonnell: Mr. Speaker, I wish to make a few observations at this point. Of course it is obvious that the detailed discussion will be under the sections of the bill, but I should like to say a word or two about a point which arises many times in the bill. I refer to the practice, which seems to me to be growing, of retroactive legislation. I have had an examination made of the bill, and as it stands there are two cases where it is made retroactive to 1948, seven cases where it is made retroactive to 1949 and subsequent years, seven cases where it is made retroactive to 1950 and subsequent years, and twelve cases where it is made retroactive to the beginning of 1951. Let me say quickly that I am not laying great stress on the last twelve cases, and I also want to say that in a considerable number of other cases I think the retroactive feature is in the nature of a relieving provision.


Douglas Charles Abbott: Every case, I think.


James MacKerras Macdonnell: Naturally I take no objection to those, but there are some -and I will not attempt to say how many at the moment-which I think are objectionable. I want to say a word or two about the question of retroactive legislation and to quote briefly one authority on it. The authority to whom I wish to refer is Professor C. K.
Income Tax Act
Allen, sometime professor of jurisprudence in the university of Oxford. He says:
No rule of construction is more firmly established than this: that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only.
Then he goes on, and this is my precise point:
What is true of the construction of statutes is also true of their making. There is in all civilized states the strongest prejudice against retrospective or ex post facto legislation, since it is, in the words of Willes J., "prima facie of questionable policy, and contrary to the general principle that legislation by which the conduct of mankind is to be regulated ought, when introduced for the first time, to deal with future acts, and ought not to change the character of past transactions carried on upon the faith of the then existing law."
I want to point out that I think the evil of this kind of legislation is not merely the great danger there is that it does injustice to existing situations but also that I think it promotes carelessness in the drafting of legislation. If the legislative draftsmen have the feeling that if they overlook anything, or deal in a superficial way with anything, it is all right because they will cure it next year, the year after, or three or four years after, I think that is a very undesirable situation.
There is one other point I wish to make, though I do this with some hesitation and certainly not with the intention of being critical of any of our excellent civil servants. In reading legislation I have often wondered whether we are not slipping into a terribly complicated way of expressing ourselves. I realize that legal draftsmanship is a very difficult thing, that it has to be specific and exact; but with deference I do raise the question whether we are not falling into rather a bad tradition under which things are not said in a direct way but constantly tend to be said in an indirect and rather confusing way so that sometimes one rather feels one has to turn himself inside out two or three times before getting to the real meaning of the statute. That may be very good for the lawyers, but it is not good for the ordinary people who have to try to understand the legislation as they go along.
Those were the observations I wished to make. I understand that when we reach section 1 of the bill in committee we shall be able to raise the question of deferred depreciation which was dealt with by the minister in his budget speech.

Income Tax Act


Wilbert Ross Thatcher: Mr. Speaker, I only wish two or three minutes of the time of the house to speak on this bill. Perhaps this may be a little personal, but I hope the house will pardon me for just a few minutes. I want to deal, partly at least, with this excess profits provision, which was discussed at the resolution stage and will be further discussed a little later. I explained my position in the house on the excess profits tax amendment which was proposed by my group at the resolution stage, and my position is still precisely the same. I feel that corporation taxes have virtually reached their peacetime peak; but I want to take issue with certain newspaper editorials commenting on this position, particularly, in western Canada. I have several in my hand. The first appeared in the Regina Leader-Post of June 1, and is headed "Thatcher kicks over traces". It says:
It happens, however, that one of the C.C.F. members at Ottawa-Mr. Ross Thatcher of Moose Jaw- is a successful businessman. How he has been able conscientiously to tag along with his visionary socialist running mates has been one of the mysteries of the times. But the expected rift appears to have come at last over this specific matter of C.C.F. corporation taxation policy.
The Winnipeg Free Press of May 22 had an editorial along the same lines headed "Mr. Thatcher's heresy" which said:
. . . this disagreement is in reality on a fundamental issue, whether or not the fact is yet realized by Mr. Thatcher. He is not quarrelling about some detail in the C.C.F. program. What he is calling into question is a fundamental premise of the C.C.F. party. Mr. Thatcher's heresy is thus a fact of very considerable political significance.
Another editorial in the Winnipeg Free Press of May 30 was headed "The C.C.F. split", and it says:
Although Mr. Coldwell has attempted to soft-pedal his party's differences with Mr. Ross Thatcher, C.C.F. member for Moose Jaw, perusal of Hansard makes it clear that the rift is serious.
Those editorials, particularly in the Saskatchewan newspapers, go on at some length in a similar vein. I remember on March 15 in this house when the hon. member for Assiniboia (Mr. Argue) moved an amendment asking that the payment under the five-year pool be 25 cents a bushel. The hon. member for Prince Albert (Mr. Helme) differed with his party, but I did not see any newspaper reports to the effect that he was splitting with the liberal group. As far as the newspapers in Saskatchewan are concerned, at least, when a Liberal member differs it is a show of independence, or it is a -show of spirit, or it is a matter of conscience, or it is refusal to be a rubber stamp. But when a C.C.F. party member differs with his colleagues, perhaps once in fifty times, it is a party split or a rift or a disagreement

on a fundamental issue; or it is heresy, or kicking over the traces.
I want to say that this party is just as democratic an organization as the Liberal party, indeed much more so. My own leader, the hon. member for Rosetown-Biggar (Mr. Coldwell), rose just after I differed some weeks ago and made this statement:
One of the greatest strengths of a democratic organization is of course that there can be differences of opinion expressed freely and openly.
My party colleagues do not object if I differ with them once in a while. They may think I am wrong, but they have not tried to suppress me at all. I have heard the hon. Liberal member for Fraser Valley (Mr. Cruickshank) differ with his party on margarine. I have heard the hon. member for Temiscouata (Mr. Pouliot) differ with his party on numerous occasions. I do not think my constituents expect me to come down here and vote in a way I do not think is correct. For instance, I do not think they would want me to do what the hon. member for Springfield (Mr. Sinnott) did this afternoon; that is, say he was against a tax and then vote for it. That does not make sense to me. As I say, since coming down here I have tried to vote according to the way I saw the issue.
I am very proud of the C.C.F. party. I am proud to be a member, and I intend to continue to be a member. I think they are doing an excellent job in Saskatchewan despite what is being said in the Liberal press. I like their hospitalization plan, their crown corporations, their financial achievements, their labour legislation, and just about everything else they have done. These Sifton papers are so biased that many people are beginning to take what they read in them with a grain of salt. According to the Sifton papers everything the Liberal party does is perfect, but there is something wrong with everything the C.C.F. party does. That does not make sense, and I say editorial comments of that kind are unwarranted, unfair and at times even malicious. As a matter of fact I consider myself a very good C.C.F. member; I think I am a good deal further to the left than many of my colleagues.
Then there is another point. I am getting a little tired of hearing my good friends in the Liberal party claim that in order to be a C.C.F. member you have to be either broke or crazy. As a matter of fact some members of the Labour party in England are among the wealthiest people in that country. I resent some of the innuendos that have been thrown around in this house and in some of the newspapers of western Canada. I apologize for having been personal, Mr. Speaker, and I will not take up more of the

time of the house. For the benefit of the Leader-Post, however, I want to repeat that I have no thought of resigning from the C.C.F. and no one in this party has suggested that I should resign.


Donald Methuen Fleming: I should like to comment briefly upon several matters during this debate on second reading. In view of the understanding which I believe has been arrived at that the subject of depreciation will be discussed on the first section in committee, I say nothing on that point.
In introducing his budget on April 10 the Minister of Finance (Mr. Abbott) indicated that in devising his tax proposals for this year he had started from this premise, as he stated at page 1807 of Hansard:
It is generally agreed, I think, that we have an excellent basic tax structure.
While there are limitations upon a discussion of the basic tax structure on a bill of this kind, I do hope an opportunity is going to be provided soon for consideration by the house of what I consider to be the quite inadequate provisions in our income tax laws in relation to exemptions. Certain exemptions there have been won by progressive degrees, but I think the list is quite inadequate. Having regard to the increased expenditure at the present time it may be that the minister will not be very receptive to suggestions for broadening certain exemptions and extending them to categories not now provided in the act, but I do hope an opportunity for considering such questions will be afforded before very long.
I am sorry that when the debate on the budget resolutions concluded the Minister of Finance (Mr. Abbott) did not have something to say on a matter which was touched upon by him in his budget speech, and was referred to by several members during the course of the debate. It is the subject of savings. At page 1803 of Hansard for April 10 the minister stated:
There is also urgent need for a higher volume of new savings . . .
Further on the same page:
The important thing is to achieve an increase in aggregate saving up to a level at least equal to the new capital investment which we shall have to make this year.
Now, others commented on this, as I did. I sought to draw the attention of the minister-


Douglas Charles Abbott: Is the hon. member going to start the budget debate all over again on general fiscal policy?
Income Tax Act


Donald Methuen Fleming: I do not know whether or not the Minister of Finance is looking for co-operation, or whether he is prepared to entertain any observations that may be made from any quarter of the house except his own. I indicated I had several matters which I proposed to bring forward briefly. I mentioned this matter of savings because of its vital importance, and because of the fact that the Minister of Finance, when the debate on the resolutions was closed, did not have anything to say on the subject.


Douglas Charles Abbott: I am not raising a point of order. My only point is that there is not much use changing the rules here if we are to have a general discussion, on a bill which relates to the principle of income tax, on savings, which is an important part of fiscal policy. My only point is that a discussion of that is much more appropriate on the motion that Your Honour leave the chair to go into committee of ways and means. I mention it in the interests of orderly discussion in the house. It seems to me that we should stick to the principle of the bill before us.


Mr. Speaker:: I understand the hon. member for Eglinton is making a brief reference to this matter. I believe he does not intend to enter into a lengthy discussion on the question of savings.


Donald Methuen Fleming: Not at all, unless the Minister of Finance proposes to force me into it.


Douglas Charles Abbott: I am not forcing anybody. If I wanted to take a strict view of the rules, I could raise a point of order and request that the hon. member be limited to a discussion of the principle of the bill before us. I do not take that stand. I am asking for the co-operation of the house in trying to have a reasonable observance of the rules.


Donald Methuen Fleming: I am observing the rules.
All I ask is that the Minister of Finance do the same.
I referred to his recognition of the importance of savings, Mr. Speaker, and I mentioned, as I did earlier, that the new taxes which the Minister of Finance is asking the house to vote, much of them in the present bill, will amount to $625 million. Last year, the total savings in Canada amounted to $645 million, which represented a decrease of thirty per cent as compared with the year before. Now, if there is not an expansion of national savings effort this year, it means that with these additional taxes the volume of savings in Canada will drop to a mere $20 million, and that would be calamitous.
I commend the statement made on this subject at the annual meeting of the

Income Tax Act
Dominion Mortgage and Investment Association in Montreal on May 3, by the president of that association, Mr. H. E. Langford of Toronto, who said:
As we all know, inflation is the great problem we face. To overcome it, all the weapons available to us must be used. One of the most effective weapons is savings . . .
Then after giving some examples, he adds: . . . one of the major battles against inflation will be lost if the rate of savings is not maintained or even increased. The need of individuals for larger savings than ever before is readily apparent. Helping individual Canadians along this road will be profitable not only to them and ourselves, but will assist in the over-all struggle against depreciation of the dollar.
It is considerations of that kind, Mr. Speaker, that have guided some of us in what we have had to say, not only on this present measure but on other budget measures that have lately been before the house.
There is one other matter which I hope there will be an opportunity to discuss adequately on this bill. It does not arise in the bill, but it arises out of orders in council which have accompanied the bill. I refer to the matter of the increase in the percentage of deduction which employers are required to hold back from their employees out of wages or salaries on account of income tax. The attempt to increase these deductions to make them cover one hundred per cent of the tax is going to give rise to a multiplicity of claims for refunds. When people come to make their returns on April 30, and to take account of their charitable donations or their medical expenses, claims for refunds will arise. I believe that is a step too far, and it is going to create inconvenience for many people in having to apply for refunds and await payment of them.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, the previous speaker sat down rather more quickly than I expected. I wish to make a few brief remarks on the second reading of this bill, because it is of great importance to the members of this group and the people of Canada, particularly in connection with certain aspects of the Income Tax Act, as we take a somewhat different view than many other members in- this house. Now, Mr. Speaker, I believe we can agree with the late Mr. Justice Holmes in respect of the payment of income tax. He is described as having paid his income tax with alacrity instead of anguish because he said, "With this I always buy civilization." We can agree with that outlook in respect to income tax when fairly levied.
As I said before, Mr. Speaker, in speaking on the resolution preceding the bill, the

C.C.F. group considers that the necessary revenue could be more fairly raised without the imposition of the surtax on the lower income groups. I am particularly speaking now of those married people with incomes of $3,000 a year or less, and single people with incomes of $1,500 a year or less. It is a basic principle with the C.C.F. movement that taxation should be based on the ability to pay. We take objection to certain aspects of this bill because we believe that principle is violated. Therefore, in what I say this evening I am speaking for this group, and expressing the considered opinion of the C.C.F. party to which I belong.
I wish to illustrate briefly our contention-


Mr. Speaker:: Order. Probably I should bring to the hon. member's attention the fact that on the motion for the house to go into committee of ways and means, an amendment was voted upon which reads as follows:
The house further regrets the failure of the government to exempt from the proposed twenty per cent defence surtax, the incomes of single persons up to $1,500 and the incomes of married persons up to $3,000.
That question was decided this year, and I doubt if a debate on that matter should be revived at this time. I would not object to the hon. member making a brief statement, but I would not want him to enter into a long discussion on that.


Herbert Wilfred Herridge: Mr. Speaker, you are quite correct. I only mentioned those facts in passing, and was not really discussing that question on this occasion. I wish to briefly illustrate our contention that large corporation profits are, in our opinion, a more just source of revenue than the revenue which is received or will be received from certain groups at this time. Since we last dealt with this question there has been increasing evidence in support of our argument. There is an accumulation of evidence in support of the point of view presented by the members of this group.
I am not going to speak at length, but I do just want to illustrate that point before proceeding to give my conclusions. I hold in my hand a clipping from the Financial Post of May 26. Whether we agree with the financial policies of the Financial Post or not, we do know it is an accurate and reliable report of business development, business profits and all things connected with business activity at this time. I think its records and its statistical information have been unquestioned. Throughout the years this paper has proven to be extremely reliable as a source of information with respect to business developments.
I notice in this paper some reference to the increasingly improved position of large

corporations in this country; therefore I intend to quote briefly from it. I am simply using this as a source of information. I am not quoting it editorially but as a source of statistical information because of its validity and soundness in supporting our arguments. This article says:
Canadian business had a good year on the average in 1950. The combined profit of 362 Canadian business firms for 1950 was up 23-8 per cent from their 1949 net. Over 69 per cent of these companies showed a higher net in 1950 than in 1949.
I want hon. members to just think of that when they are thinking of the requests for increasing the basic disability pension for veterans when next those requests come before the house. I am coming back into order, Mr. Speaker. I continue:
Further the combined financial position of these companies was strengthened. Net working capital of the 362 companies increased 18-3 per cent during the year and their net worth (equity of all shareholders) increased 9-1 per cent. Thus they improved their position for meeting the demands of the defence economy and for weathering any adverse economic conditions that may lie ahead.
The article goes on to say:
Some significant facts disclosed by the Post's study are:
(1)	Total income taxes paid by 360 of these firms were 34-8 per cent higher in 1950 than in 1949. This reflects both the increased volume of business and resultant higher earnings and the increase of 5 per cent in the rate of tax effective after September 1, 1950.
(2)	Shareholders received 22 per cent more in total dollar dividends in 1950 than in 1949. The percentage increase in dividends paid was only slightly less than the percentage increase in net profit.
(3)	Despite the increase in cash dividends paid, shareholders of these firms received a smaller proportion of the net profit in 1950 than in 1949 ( 50*8 per cent vs. 51-6 per cent).
(4)	There was a wide variation in results both as between groups and between individual companies within the groups.
(7)	The net working capital position of the 362 firms was strengthened by 18-3 per cent in 1950, with every group showing an improvement.
(8)	The combined net asset position of the 362 firms was increased by 9-1 per cent with all groups showing a higher net worth.
The article goes on to indicate that there was a great improvement in the percentage of profits and of business activity in 1950 over 1949, and that the prospects for this year are even better. That is our point, Mr. Speaker. We maintain that we can obtain a greater percentage of our revenue from some of these corporations, particularly the larger ones, than provision is made for in this bill. Something is happening at the present time that is quite unusual in Canadian business history, at least unusual until recent years. These unusual profits are being invested in real wealth, in plant, equipment, land, real estate, and assets of that sort. The
Income Tax Act
large corporations of this country are investing their excess profits in a form of wealth that will be largely unaffected by future inflation. They are placing themselves in a very strong position with respect to the increasing inflationary period that may come in the future, while at the same time the general public is asked to curtail expenditure, particularly consumer expenditure, and, as a result of these savings in the purchasing of consumer goods, to invest either by savings in the bank or by the purchase of bonds.
We believe, Mr. Speaker, that this process is wrong at the present time; and that it is adding to inflation. We believe that these companies should be seeking new capital investment, and that the state should be getting a larger percentage of these excess profits in order to reduce inflation and decrease the burden on the lower income groups.
This great expansion out of profits in Canada at the present time in a form of wealth which will be largely unaffected by any future inflation is being carried on at the expense generally of the Canadian public. The result of that type of expansion, Mr. Speaker, is that more and more wealth is getting into fewer and fewer hands. If companies were required to carry on their expansion as a result of raising new capital the wealth would at least to some extent be more diversified and in a greater number of hands.
As against that, the worker is asked to save, and his savings are largely in the form of bank savings or in small bonds. He is being asked to save in a form that will be seriously affected by any inflation that occurs in the future.
What is the position of the low income groups at the present time? The people I am speaking of now particularly are married people on incomes of $3,000 or less, and single people on incomes of $1,500 or less. The cost of living is going up monthly. Nobody can deny that. The cost of food, the cost of clothing, the cost of shelter, the cost of living and the cost of the necessities of life to keep the human organism alive and working are going up all the time. In addition to that the cost of housing is going up. That is a very important matter so far as this lower income group is concerned, because it is within this group that we find the greatest need for housing in Canada at the present time. I hold in my hand a clipping from the Financial Post of May 26 which reads:
British Columbia
Building costs:	Vancouver building costs have
climbed about 25 per cent in the past year and are still moving upward. A survey by a New York firm of consulting engineers places the index at 171-2

Income Tax Act
in March, 1950, and at 203-8 In March of this year. Calculated on ordinary frame houses, the index takes into consideration costs of lumber, plumbing, wages and1 other key materials and services.
Before passing on I want to make a point. The cost of housing has gone up 25 per cent in Vancouver. People are often inclined to say that wages have gone up and have increased the cost of building. They have to some extent, but wages have not increased 25 per cent in Vancouver in the building trade in the last twelve months; this increase represents profits. This means that as against the position of the large corporations with excess profits to invest in the expansion of capital, plant and equipment, we have these groups with no reserves, with a greater difficulty to live from day to day, facing an insecure future, with this tax actually to some extent increasing their cost of living and no opportunity for expansion in any direction whatever.
In conclusion, what is the position from our point of view? Against what background do we in this group believe we should plan this income Tax Act at this time on a fairer basis? Here we have the corporations with expanding profits, and the low income groups that I have mentioned with a lowering standard of living, to be further lowered by increased taxation. With democracy demanding equality of sacrifice, surely at a time like this when Canada is facing a very serious defence problem we should do all we can in the house to promote at least to some extent equality of sacrifice, so far as taxation is concerned. Therefore I move, seconded by the hon. member for Saskatoon (Mr. Knight):
That this bill be not now read a second time but that it be resolved that in the opinion of this house consideration should be given by the government to altering the provisions with respect to corporation income tax so as to levy graduated taxation on excess profits.
In conclusion I urge hon. members, when they consider voting on this amendment, which we are very much concerned about, to consider carefully those Canadians who are losing their lives in Korea, Canadians who are being wounded and other Canadians who are having great difficulty at this time to carry on because of the increased cost of living. I am sure if hon. members give consideration to those facts, and face this question fairly, they will realize they will be fully justified in supporting the amendment as an attempt to introduce to some extent into this taxation a measure of equality of sacrifice.
[Mr. Herrldge.l
The house divided	on the amendment (Mr. Herridge) which was negatived on the follow-	
ing division:	
YEAS Messrs:	
Argue	Knowles
Beyerstein	Maclnnis
Blackmore	Nose worthy
Bryce	Quelch
Coldwell	Shaw
Gillis	Stewart (Winnipeg North)
Herridge	Thomas
Johnston	Wright
Jones Knight	Wylie-19.
NAYS	
Messrs:	
Abbott	George
Adamson	Gibson
Anderson	Gingras
Applewhaite	Gingues
Ashbourne	Graydon
Balcer	Green
Bater	Gregg
Beaudoin	Harkness
Beaudry	Harrison
Bennett	Hees
Black (Cumberland)	Hellyer
Blair	Helme
Blanchette	Henderson
Blue	Henry
Boivin	Hetland
Bonnier	Higgins
Bradette	Hodgson
Bradley	Huffman
Breton	Hunter
Brisson	James
Brooks	Jeffery
Bruneau	Kent
Byrne	Kirk (Antigonish-
Cameron	Guysborough)
Campney	Lafontaine
Carter	Langlois (Gaspe)
Casselman	Lapointe
Catherwood	Larson
Cavers	Lefrancois
Charlton	Lennard
Clark	Little
Cleaver	Macdonald (Edmonton
Cloutier	East)
Corry	Macdonnell (Greenwood)
Cote (St. Jean-Iberville-	MacDougall
Napierville)	MacKenzie
Cote (Verdun-La Salle)	MacLean (Cape Breton
Coyle	North and Victoria)
Crestohl	Macnaughton
Darroch	McCubbin
Decore	McDonald (Parry Sound-
Denis	Muskoka)
Dewar	McGregor
Dickey	McLean (Huron-Perth)
Dion	McLure
Drew	McMillan
Dumas	Me William
Eudes	Major
Fleming	Martin
Fournier (Hull)	Masse
Fournier (Maisonneuve-	Mayhew
Rosemont)	Mott
Fraser	Murphy
Fulford	Murray (Cariboo)
Garson	Mutch
Gauthier (Lake St. John) Nowlan	
Gauthier (Lapointe)	Pouliot
Gauthier (Sudbury)	Prudham

Ratelle
Richard (Gloucester)
Riley
Rinfret
Ross (Hamilton East) St. Laurent Sinclair Sinnott
Smith (Queens-Shelburne)
Smith (York North)
Stanfield
Stewart (Yorkton)
Stick
Tremblay
Viau
Weaver
White (Hastings-Peterborough) Whiteside Wood-129.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Beaudoin in the chair.
On section 1-Income from office or employment.
Douglas Charles Abbott: Although this has nothing to do with this particular clause, I want to confirm an understanding, which was arrived at when we were in committee, that by unanimous consent it will be in order to discuss depreciation.


Gordon Graydon: Mr. Chairman, I should like to raise a question with respect to income tax which is based upon an exemplary case which must have been repeated many times throughout Canada and which no doubt has come to the attention of the minister on previous occasions. I refer to a single lady who has looked1 after a maiden aunt who was aged and destitute and who would have been homeless if her devoted niece had not provided for her during the year. This single person maintained a home in which she kept her aunt and was able to claim relief under the Income Tax Act because she was maintaining a home in which she supported herself. In other words, she came under that section which provides:
... a person wholly dependent upon him and connected with him by blood relationship, marriage or adoption . . .
In 1950 this single lady married. She still has a taxable income and still looks after her aged infirm maiden aunt. However, her claim for an allowance for a dependent has been disallowed. I understand that she could claim for a parent, a grandparent, a brother, a sister, a daughter or a sister training as a nurse, a brother-in-law, a sister-in-law or a child who is not legally adopted. It seems strange that these other claims can be made but a case which apparently is such a strong one must of course be ruled out under the present regulations and the law. Would the minister give some indication whether or not the government can adapt their policy so as to take care of what looks like a very worthy case such as the one I have just described?


Douglas Charles Abbott: I will consider very carefully the facts which my hon. friend has presented. I did not want to interrupt him, but this
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question of exemptions for other than specified dependents in the act is a very broad one. I do not think it is strictly relevant to discuss it under this section. As I pointed out, it was arranged that we were going to discuss the subject of depreciation. However, I will consider the facts that he has put forward, and perhaps at an appropriate time before we finish consideration of the bill I will try to give him a considered answer on it.


James MacKerras Macdonnell: I should like to make a few brief observations on the question of depreciation which I think has an importance very great and perhaps different from what some of us thought at the time that it was originally brought forward by the minister. I will read briefly from what the minister said in his budget speech at page 1808 of Hansard. After speaking about the tremendous investment program facing us in the year ahead the minister said:
What we need is a stiff financial deterrent that will affect particularly the businessman who is considering the kind of investment which is attractive, not because of its long-term soundness, but because it can be written off out of the expected high profits of the next few years at a time when he expects the rate of corporate income tax to be abnormally high.
Then the minister refers in a general way to the nature of the deterrent, and I want to read something that he said later because I think it is very important to have in mind that this is the type of thing the minister was picturing to us. I want to suggest that what this provision may do is to have results that are far enough off from the minister's intention unless it is very broadly interpreted, and indeed I think unless some changes are made in the regulations. The minister went on to say:
The deterrent will particularly affect the businessman whose decision to make a capital expenditure is strongly influenced by the expectation that he can write off a large fraction of his cost ... In other words it will compel the businessman to give primary attention to the long-term prospects of proposed capital expenditures and if outside financial participation is required lenders will also take this view.
What I want to draw attention to at the outset is that the whole tenor of this is that it is to affect big business, people who are wanting to go into business in a big way-


Douglas Charles Abbott: My hon. friend is wrong about that. It is to affect everyone, big and small.


James MacKerras Macdonnell: I say the
atmosphere that the minister created is rather of the big man. It is because it does affect the big man-


Douglas Charles Abbott: That was completely unintentional, if that is the case.

Income Tax Act


James MacKerras Macdonnell: At any rate I am coming to the other aspect of it because what I want to ask him to consider particularly is that it affects the small as well as the big. It is that point I wish to emphasize particularly. I do not agree by any means with all that the hon. member for Kootenay West (Mr. Herridge) said a little while ago, but I agree very heartily with the fear he expressed that in the circumstances in which we find ourselves at the moment, and with the development of the defence economy, we may find it harder and harder for small men to originate small businesses or, as he put it, we may find more and more wealth passing into fewer and fewer hands. That is something that should not be disregarded.
I want to refer in passing to the regulations which will come up again. I point out also in passing that the purpose is really twofold. First of all it is to act as a bit of a damper on expansion, and second I presume it is to conserve necessary defence materials. That may be ancillary, but I think it is not irrelevant. I want to point out next that there is the greatest danger as the matter stands that it will be almost impossible for new businesses to start up, and I even suggest to the minister that it should be considered whether there may not be an exemption of businesses of a certain size. I am not prepared to dogmatize as to the amount, but I suggest very earnestly that we should try not to allow this to create a situation which will make it difficult, if not impossible, for new businesses to arise, because we are not considering something which is going to last for a month or a year. As now contemplated it will last for four years, and if we create a situation for four years which is going to make it, as I say, difficult if not impossible for small businesses to arise, or at any rate make it very much harder for them, I think that is a very serious thing and should be so considered.
I next want to bring to the attention of the minister certain specific types of cases which it seems to me will arise, and the problems of which I hope can be most seriously considered. I am not overlooking the fact that there is a wide range of exceptions, and that beyond the exception there is a discretion. I am not overlooking that at all, but having said that I wish to bring certain cases to attention which I think are pertinent, and in some cases urgent. I hope they will be considered on their merits, and that we may have an answer with regard to each of them.
First of all I wish to go back and read one operative clause from what the minister said in his budget speech. At page 1808 of Hansard he said:
To provide this deterrent it is proposed to defer for a period of four years the right to charge depreciation on all capital assets acquired after April 10, 1951, excepting certain classes of assets defined in the regulations and certain additional kinds of assets when certified as eligible by the Minister of Trade and Commerce.
The types of cases I wish to bring up are these. The first is where a business was committed, at the time the order became effective, to capital expenditure. In other words, it was not a case of making a decision after the minister's speech, after the coming into effect. There was a capital investment commitment made before that. Second, there is the case of businesses which merely change the form of ownership after the order becomes effective. For example you have a single business which is turned into a corporation, or a partnership turned into a limited liability company, or the case of a man dying, leaving his business to his son and creating a situation where the business has to be sold. If the right to depreciation is gone in such a case we shall have a serious lessening of the value of the property. Finally I want to reiterate again what I said, that I hope special consideration will be given to the position of those wishing to start up small businesses, and on these points I should like to hear the minister's comments.


Douglas Charles Abbott: On the points that have been raised by my hon. friend, first I should say that the regulations are being reviewed at the moment. I understand that the Minister of National Revenue, with the concurrence of myself and the Minister of Trade and Commerce, very shortly will be recommending certain amendments to these regulations in the light of the experience we have had in the three or four weeks since the original regulations were put in, in the light of applications which have been made, and so on. Among other things I might say that provision will be made under which the names of those given certificates of eligibility, together with the reasons for which they were given, will be published, probably in the official gazette. In any case that will be provided in the regulations.
Consideration is being given to the problem raised by my hon. friend of a change in the form of ownership, and I think probably the Minister of Trade and Commerce, the Minister of National Revenue and myself will be making some announcement about

that before very long. On the question of small businesses, it is pretty hard to say what a small business is. As my hon. friend knows, the rate of corporation income tax on the smaller businesses is very much lower than on the large businesses. It was 10 per cent; it is now 15 per cent. I do not think any serious hardship would be suffered by these smaller businesses if depreciation were postponed on the assets they may acquire.
I want to make it clear that this measure is not aimed at large businesses as such or at small businesses as such, but at all businesses. The main purpose of the proposal is to cause businessmen to defer less essential expenditures, and to be perfectly satisfied that the asset they are acquiring is one they are willing to keep for a number of years and which will be profitable for a number of years, so that on the expiration of the period during which depreciation is deferred they will still be in a position to make profits against which the capital cost allowances can be taken.


James MacKerras Macdonnell: I appreciate what the minister has said, but I would like to ask one or two things. The minister has indicated that changes are in contemplation. May I take it that when these changes are made an opportunity will be provided in the near future to discuss the matter again in the house?


Douglas Charles Abbott: I cannot give any positive
assurance as to that in the light of the probable sessional program. My hon. friend appreciates that these regulations are made under section 11 of the Income Tax Act, which provides for capital cost allowances. The granting of capital cost allowances is made by regulation, on the recommendation of the Minister of National Revenue. In strict theory he does not have to do so; but of course, as I explained, this is a matter for determination by regulation. Under the old act it was purely a matter of ministerial discretion; under the new act it is provided by regulation. I should hope that the regulations would be completed and perhaps tabled before the estimates of the Department of National Revenue are finished. Unquestionably at that time there would be an opportunity to question the minister about them, though I think perhaps a more satisfactory course would be to have that discussion when the estimates of the Minister of Trade and Commerce were under consideration, because it is by his department that the certificates of eligibility are being issued. The Department of National Revenue will have the responsibility of determining questions of fact such as when particular assets were acquired, and so on. I cannot
Income Tax Act
give a positive assurance that the amendments, which I hope will be available within a few days, will be discussed, but I should think there would be that opportunity and certainly I would do what I could to provide a suitable time at which that discussion could take place.


James MacKerras Macdonnell: Purely as
a matter of what seems a convenient practice, with these changes likely to be available in a few days, I take it that submissions could be made to the proper authority continuing this discussion, in the hope that some of the things we bring up now may be felt worthy of consideration. These regulations are not like the laws of the Medes and Persians.


Douglas Charles Abbott: Oh, no.


James MacKerras Macdonnell: I take it
they are flexible; that is the reason they are left in regulation form, is it not?


Douglas Charles Abbott: That is it exactly. This is a new move. The government wants to make the regulations as reasonable as possible, to cause as little dislocation as possible and yet achieve the objective in view. The department is always ready to listen, and in fact welcomes representations from businessmen and others who may be affected, in order to ensure that the regulations are drawn as well as possible.


James MacKerras Macdonnell: That seems a very sensible way to deal with the situation. While I am on my feet I might as well mention one or two other points so they will be on record and those who are considering the regulations will have them before them. Another question that arises is the depreciation of used equipment and buildings which pass into the hands of new owners. Obviously there is a situation there. Then there is the question of the depreciation where the capital asset acquired has been used by a former owner, though some kind of safeguard would be necessary so it would be clear that the transaction was genuine. Probably it should be in the hands of the former owner for a period of twelve months, say. Finally there is the case where you have a business property on which the purchaser had an option to purchase dated prior to April 10. I am not going to delay the committee by dwelling further on these points. I am glad to know the regulations are flexible, and that these matters can be brought up and discussed further from time to time.


Douglas Charles Abbott: As my hon. friend has indicated, this question involves a number of very complex problems. Those he has raised are being considered. It may be possible to do something about some of them;

Income Tax Act
in others it may not. We are proceeding in this, as in all other things, by a process of trial and error, by elimination, and by seeing what can and cannot be done.


Mr. Stanfield:: I would like the minister to explain this deferred depreciation a little more clearly, because I have heard two or three versions. I imagine the correct one is that if you buy a new piece of machinery you lose four years' depreciation. Some people seem to think that when 1956 comes around they will get the four years' depreciation all at once, but I do not think that is right. Would the minister explain it?


Douglas Charles Abbott: To put it shortly, this is pushing the whole period forward. Suppose an article was acquired in June of 1951. If this rule were not in force depreciation would commence in 1951. Instead of that the right to take depreciation or capital cost allowance is deferred for four years. After that four-year period the owner can take the depreciation he could have taken in 1951. In 1955, let us say, he can take the depreciation he could have taken now, in 1956 the depreciation he could have taken in 1952, and so oh until the asset is fully depreciated. I want to emphasize that the right to depreciation is simply postponed; it is not taken away. So long as earnings are available after the expiration of the period, then the depreciation can be taken.


Frank Thomas Stanfield: As I said during the budget debate, I think this is a very foolish change for the minister to make. I have a very high regard for him, but I believe he has made a mistake in this case. For many years the depreciation rate was 10 per cent, and everyone knew exactly what to expect and just what to do. Even in times of great crisis, even when our profits' tax had to go to seventy-five per cent, or say it did, as long as you had a steady rate of depreciation and knew what you were doing, business could keep on going along on a sound basis. But now, when you get fooling around with depreciation, and fooling around with everything, you get to a point where nobody knows what he is doing. I believe the minister was ill advised to change these rates of depreciation. He should have left it the way it was.


Douglas Charles Abbott: I suppose we have been discussing depreciation, Mr. Chairman, but the clause itself does not relate to that.


Donald Methuen Fleming: Mr. Chairman, the minister has given some indication to the house that the present order in council, which I believe is P.C. 1778 dated April 10, is now under review, and that certain amendments may be made to that order. I believe that that fact probably makes it all the more desirable,

since the minister has not indicated the nature of the probable amendment-perhaps he is not in a position to do so-that any views hon. members may have concerning this measure should be put forward at this point, in the hope that they may receive consideration when the amendments to the order in council are being determined.
There are one or two aspects of the view put forward by the minister in regard to this whole subject that I believe deserve comment. The minister has stated that one of the objectives of the proposals to defer depreciation is to encourage business enterprises, where possible, to defer physical expansion of their plant and equipment. Now, I suppose every one of us will say that, so far as that will make a contribution towards conserving essential defence materials that may be in short supply, the purpose is worthy of support. Again, to the extent to which this measure may be intended to reduce postpone-able expenditures, and to increase savings, about which we were speaking earlier in the evening, I think the house would wish to approach the proposals favourably. On the other hand, Mr. Chairman, we have to assess the professed purpose that the minister has assigned in relation to the facts as we see them developing since April 10.
I am glad the minister has spoken as he has tonight in clarifying the issue, because unquestionably the words he used on pages 1808 and 1809 of Hansard of April 10, have carried the impression abroad that his policy was directed against new and smaller businesses. The minister tonight has sought to correct that impression, and to stress that it is of general application. Nevertheless, Mr. Chairman, the fact of the matter is that the weight of this new policy is going to be felt particularly by newer businesses, younger businesses and businesses which are in the course of expansion. They are going to be now compelled either to arrest their expansion or forgo what is a very important element in their financial plans, namely, depreciation. So we may say that a young or growing industry is the one that will feel the effects of this new policy most severely at the present time.
To that extent, any measure of this kind is necessarily discriminatory. This is not going to hurt any business that had the good fortune to carry out any needed expansion of physical facilities or physical plant prior to April 10. It is a matter of luck that some industries acquired their physical plant or assets prior to April 10, and will be permitted to depreciate them in the ordinary way, while other businesses, in the midst of expansion and the

growing pains of a young business, but which did not acquire the physical plant prior to April 10, are now going to feel the full weight of this new policy. This is a regrettable form of discrimination. It may be inevitable in measures of this kind.


Douglas Charles Abbott: It is true of steel control, too.


Donald Methuen Fleming: I say, it may be inevitable in any measure of this kind, but nevertheless the effect of it is discriminatory.
The hon. member for Greenwood raised the problem of the application of this new policy in circumstances in which it is, in effect, given a retroactive operation. The test which is laid down by the minister, and which found its way into order in council P.C. 1778, is acquisition of the particular assets by the taxpayer up to April 10. Now, sir, that word, itself, as a test presents no little difficulty. I am hopeful that the minister, having had the problem brought before him tonight by the member for Greenwood, is going to endeavour to do something to soften the severity of order in council P.C. 1778 with respect to those taxpayers who had entered into commitments up to April 10, but who had not then acquired the particular physical assets which would otherwise have been subject to depreciation.
Sir, there are not a few cases of that kind, where in the ordinary course the particular taxpayer has made a binding commitment prior to April 10, a commitment which had not been carried to the point where delivery of the physical asset had been made to him prior to that date, but where he is compelled by the nature of his commitment to proceed and to purchase the particular asset which would otherwise be depreciable for tax purposes. I am sure there must have been many
Income Tax Act
cases of that type brought to the attention of the minister. I expect most hon. members in this committee have had some such cases brought to their personal attention. Now, those are cases of real hardship because had those particular taxpayers been aware in time, it is certain that in a great many cases they would not have entered into the commitment to acquire assets of the type upon which they are not now to be entitled to any depreciation allowance.
Section stands.
Progress reported.



BUSINESS OF THE HOUSE

Alphonse Fournier: Mr. Speaker, tomorrow we shall give third reading to Bill No. 294, an act to amend the Excise Tax Act. Then we shall take up non-contentious matters for a change, Bill No. 344, an act to amend the Juvenile Delinquents Act, 1929; Bill No. 355, an act respecting weights and measures; and then three resolutions, one in the name of the Minister of Veterans Affairs, No. 13 on today's order paper, the basis of a measure to amend the Returned Soldiers Insurance Act; the second one will be No. 14 on today's order paper, standing in the name of the Minister of Mines and Technical Surveys, concerning the Canada Lands Surveys Act; then No. 12 on the order paper, standing in the name of the Minister of National Defence, concerning the National Defence Act. I think that will take all afternoon. If we do complete these, I shall have to look further into the order paper.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Wednesday, June 6, 1951